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The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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US dollar weakens: DXY approaches 102

The US dollar dominance in the market seems to have attained its climax after hitting its all-time high at 105 last month. This was caused by the interest rate hike in April by 50 basis points, giving the US dollar an edge over every other currency in the market. From April till May, this dominance seems to be creating a new low this week, with the dollar index crossing 102.1 today during the Asian session - the first time in four weeks.

Many pairs crossed with the US dollar are currently retaking a fresh breath and printing new long green candles after a long bearish trend. EURUSD, for instance, has broken its 2 months resistance at 1.0600 and is trading today at a new all-time high at 1.06900. Also, NZDUSD had broken its resistance this week at 0.64040 to create a new ATH at 0.64897. 

Commodities such as gold & silver, and crude oil have been favoured by this weakness. Investors are gradually returning to the risk-on mode to diversify their portfolios into risky assets.

Essential Factors to affect the US dollar today 

Some events from the economic calendar today will further determine the next direction for the US dollar. We have discussed them below: 

Flash Manufacturing PMI and Flash Services PMI

The Flash Manufacturing PMI gives an estimated value of the manufacturing strength of a country using 80% - 90% value of the total Purchasing Managers' Index (PMI) survey responses from each month. Higher readings from this data will mean a bullish trend for the dollar. A lower reading below the forecast which is 55.1, would indicate an unfavourable direction for the US dollar.

Also, the Flash services PMI on its part, gives an estimate of the Services Purchasing Managers' Index (PMI) in the US. An increase in purchasing power will also mean a positive for the dollar and vice-versa. 

  1. New Home Sales

    The forecast for this is 751k, while the previous is 763k. An increase in the new home sales is a good sign of economic growth. 
  2. Richmond Manufacturing Index

    This is an index of the manufacturing activity carried out so far in the Fifth Federal Reserve District, which includes: West Virginia, Carolina, the District of Columbia, Virginia, and Maryland. The forecast for this is 9 while the previous figure is 14. Higher readings will be bullish for the US dollar. 
  3. Powell's Speech

    The Fed Chairman, Jerome Powell, will deliver an important speech today during the New York session. This will largely determine the destiny of the US dollar. Any dovish stance from him will take the dollar index below 100. Will another hawkish stance revise the dollar dominance again?
Last Updated: 24/05/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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