The US Dollar Strengthens in European Session
- The US Dollar sees substantial buying in the European session on Monday.
- European PMIs collapsed in September, as traders await the US ones on Monday.
- The US Dollar Index pops higher and reclaims 101.00 in early Monday trading.
The US Dollar (USD) is showing strength on Monday, trading above 101.00 following the release of preliminary S&P Global and Hamburg Commercial Bank (HCOB) Purchase Managers Index (PMI) data for France, Germany, and the broader Eurozone. The decline in activity in Europe is raising concerns and shifting focus towards the region. Traders are flocking to the safety of the US Dollar, moving away from the weakening Euro.
Traders now eagerly await the release of PMI data from the United States to compare with the European figures. With most PMI indicators in Europe showing contraction, it suggests Europe may be heading towards a recession while the US economy remains resilient.
Daily Digest Market Movers: Back to the Usual Message
- The main event on Monday is the preliminary US S&P Global PMIs release for September:
- Services data is expected to decrease to 55.2 from the previous reading of 55.7.
- Manufacturing reading is expected to slightly improve but remains in contraction at 48.5, better than August’s 47.9.
- The Composite number was at 54.6 in August with no forecast available.
- US Federal Reserve speakers will provide insights on monetary policy:
- At 12:00 GMT, Federal Reserve Bank of Atlanta President Raphael Bostic delivers a speech on the US economic outlook.
- At 14:15 GMT, Federal Reserve Bank of Chicago President Austan Goolsbee discusses monetary policy and the US economy.
- Around 17:00 GMT, Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a Q&A session.
- Equity markets in Europe are declining due to poor PMI numbers, with US futures also down ahead of the trading session.
- CME Fedwatch Tool shows a 50.6% chance of a 25-basis-point rate cut at the next Fed meeting on November 7.
- The US 10-year benchmark rate trades at 3.74%, nearing last week’s high at 3.76%.
US Dollar Index Technical Analysis: Watch out for the Squeeze!
The US Dollar Index (DXY) struggled to move higher last week despite a rate cut. The upcoming PMI releases may favor the US Dollar over Europe, potentially leading to an upgrade in its value. The index’s upper levels remain at 101.90, with further targets at 103.18 and beyond.
Support levels are at 100.62 and 99.58, with potential downside risks if these levels are breached.
US Dollar Index: Daily Chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States and the most traded currency globally. Its value is influenced by the Federal Reserve’s monetary policy, with interest rate adjustments playing a significant role. In extreme cases, the Fed may resort to quantitative easing or tightening to manage the currency’s value.