Heavy data week for the DXYThe dollar had a turbulent week last due to stronger than expected US CPI and PPI prints along with hawkish sentiments from the Fed’s mouthpieces. This saw the DXY swing in a wide range between 102.586 and 104.727 before ultimately closing the week roughly 0.4% higher at 103.884. The neckline from the 2022 uptrend along with the blue 50% Fibo retracement level at 104.178 kept the greenback’s gains at bay.
The data calendar is quite heavy this week. A host of PMI results from the US and euro-zone will be released today, on Thursday US GDP results for 2022Q4 will be released and to close the week out, the Fed’s preferred inflation metric the PCE price index will be updated for the month of January. The dollar rally from the past three weeks is cooling off as investors await these host of data prints.
I’m expecting the DXY to pullback to re-test the 50-day MA level of 103.302 which has turned from a resistance to a support. If the 50-day MA holds, I see the dollar bouncing from it aggressively towards the 200-day MA level of 106.446 which coincides with the green and blue 38.2% Fibo retracement levels.
Technical indicators: The daily MACD buy signal is losing some momentum and could roll-over into a sell signal as the DXY moves to re-test the 50-day MA level. The RSI is still holding that degree of bullish divergence, but the upward trend has fizzled out a bit.
