The US Dollar (USD) saw a downturn on Monday and continued trading mostly in the red on Tuesday. Traders are awaiting the upcoming Federal Open Market Committee (FOMC) meeting where the US Federal Reserve’s policy decision on interest rates will be discussed. The US Dollar Index remains under selling pressure near its yearly low.
The Retail Sales data is also expected to be released on Tuesday. While this data is typically market-moving, traders are likely to have a subdued reaction as they wait for the outcome of the Fed meeting. A substantial move may only occur if Retail Sales contracted in August, which could support a bigger rate cut by the Fed.
The US Dollar Index’s technical analysis shows that it has been trading within a narrow range near its yearly lows. There is a risk that the DXY could break below this range once the Fed delivers its rate cut. The upper level of the range is at 101.90, and further resistance levels include the 55-day Simple Moving Average (SMA) at 102.89 and the 200-day SMA at 103.81.
On the downside, the DXY has found support at 100.62, with the next level at 99.58. If these levels are broken, the DXY could potentially reach levels from 2023 near 97.73. Overall, traders are closely watching the movement of the US Dollar Index ahead of the Fed meeting and Retail Sales data release.
In terms of economic indicators, the Retail Sales data measures the value of total receipts of retail and food stores in the United States. The monthly changes in sales reflect the rate of changes in these sectors. This data is adjusted for seasonal and holiday variations, reflecting consumer spending trends. A high reading is typically bullish for the US Dollar, while a low reading is bearish.
The US Dollar Index is currently testing its technical levels, with the risk of breaking below its current range. Traders are closely monitoring the upcoming FOMC meeting and Retail Sales data release for any potential market-moving events. The Retail Sales data is significant as it reflects consumer spending trends, a major driver of the US economy. Overall, the US Dollar remains under selling pressure near its yearly low, with uncertainty over the Fed’s interest rate cut decision.
