The dollar is once again one of the weaker G10 currencies today. However, the turning point could be the opening of the cash session on Wall Street after the long weekend. The USDIDX dollar index is down 0.12% to 104.3700 points.
Recent statements from FOMC members have been definitely hawkish, with bankers considering the possibility of interest rate cuts this year. The FOMC minutes published last week also reflected this, with some members indicating that the level of tightening is insufficient to bring inflation to target. However, these factors have not strengthened the dollar, which has been systematically weakening for a month. Currently, markets are pricing in the first rate cut in September or October of this year, a stance supported by initial rate cuts in other central banks around the world, potentially including the ECB next week.
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Declines in USDIDX began after the FOMC decision at the end of April (red rectangle on the chart). A similar pattern was observed after the meeting in early November 2023. However, after several weeks of a downward trend, the dollar index is now at a key support line, which has already been a turning point in the trend three times. The deciding factor may be the Q1 2024 GDP report on Thursday and the PCE report on Friday. If the support line is broken, we can expect a move towards 104.0000 points or even 103.5000 points. Otherwise, the upper limit for bulls is 104.8000.
Source: xStation 5
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