As the US markets open after the Labor Day holiday, the US Dollar (USD) is trading slightly higher against most major currencies. The only exception is the Japanese Yen (JPY), which remains strong. The US Dollar Index is on the verge of breaking an important resistance level, signaling a potential breakout.
Today, the focus is on the release of the Institute for Supply Management (ISM) Manufacturing survey for August. This data will provide insights into the performance of the US manufacturing sector. With news of German car maker Volkswagen considering closing factories in Germany, there is a possibility of a divergence between the US and European economies, which could impact the USD positively.
Daily Market Movers: Key Economic Indicators to Watch
- S&P Global will release the final Manufacturing PMI for August at 13:45 GMT.
- The ISM will release its Manufacturing numbers for August at 14:00 GMT, including the PMI, Prices Paid component, New Orders index, and Employment Index.
- The TechnoMetrica Institute of Policy and Politics (TIPP) will release its economic Optimism survey for September.
- Equities are facing minor losses in European indices and US futures.
- The CME Fedwatch Tool shows a high likelihood of a 25 bps interest rate cut by the Fed in September.
- The US 10-year benchmark rate is trading slightly lower at 3.90%.
US Dollar Index Technical Analysis: Breaking Key Levels
The US Dollar Index (DXY) is at a critical juncture today, with the ISM data potentially pushing it above a key resistance level or triggering a pullback. The index is close to breaking through 101.90, with a further upside target of 103.18. However, a strong resistance near 104.00, coupled with the 200-day Simple Moving Average (SMA), could pose a challenge for further gains.
On the downside, the support levels to watch are 100.62 and 99.58, with further downside potential towards 97.73 if the lower levels are breached.
US Dollar FAQs: Understanding the Impact of Monetary Policy
The US Dollar (USD) is the world’s most traded currency, influenced largely by the Federal Reserve’s monetary policy. The Fed’s decisions on interest rates and quantitative easing (QE) play a significant role in shaping the value of the USD. Higher interest rates boost the USD, while QE tends to weaken it. Understanding these factors can help investors navigate the currency markets effectively.
In conclusion, the US Dollar’s performance against major currencies is influenced by key economic indicators, geopolitical events, and monetary policy decisions. Keeping a close watch on these factors can help investors make informed decisions in the forex market.