- The US Dollar consolidates ahead of a crucial week in geopolitics
- Traders anticipating potential headlines from Riyadh regarding a possible breakthrough.
- The US Dollar Index (DXY) remains in the mid-106 region, seeking direction.
The US Dollar Index (DXY), which tracks the US Dollar’s performance against six major currencies, consolidates last week's losses and trades flat around 106.80 on Monday. With several recent data points and disappointing January Retail Sales indicating slower US economic growth, the US economy is no longer an outlier. This week, attention shifts to Riyadh, Saudi Arabia, where US and Russian officials are set to meet ahead of talks between US President Donald Trump and Russian President Vladimir Putin.
The economic calendar is light this week, leading up to the S&P Purchasing Managers Index (PMI) data on Friday. While the US bond market is closed for President’s Day, three Federal Reserve policymakers are scheduled to speak on Monday.
Daily Digest Market Movers: Eyes on Riyadh
- US bond markets are closed for the President’s Day holiday. Traders should remain alert for headlines from Riyadh, where US and Russian officials are meeting ahead of discussions between President Trump and President Putin regarding a potential Ukraine deal.
- At 14:30 GMT, Fed Bank of Philadelphia’s Patrick Harker will speak on the economic outlook at the Central Banking Series Conference in Nassau, Bahamas.
- At 15:20 GMT, Fed Governor Michelle W. Bowman will address the economy and bank regulation at the American Bankers Association Conference in Phoenix, Arizona.
- At 23:00 GMT, Fed Governor Christopher J. Waller will discuss the economic outlook at the UNSW Macroeconomic Workshop in Sydney, Australia.
- Equities begin the week with modest, cautious gains.
- According to the CME FedWatch tool, there’s a 46.7% chance that interest rates will remain unchanged in June.
- The US 10-year yield sits around 4.48%, though it remains closed on Monday.
US Dollar Index Technical Analysis: Awaiting Direction
With most US markets closed for President’s Day, the US Dollar Index (DXY) is expected to remain relatively stagnant on Monday. Market attention will focus on headlines surrounding Ukraine, where any peace deal could lead to false breaks and a knee-jerk market reaction. This could potentially trigger a DXY rally.
On the upside, the former support level at 107.35 now serves as resistance, followed by the 55-day SMA at 107.91 and the 108.00 level.
On the downside, support levels to watch include 106.52 (April 16, 2024 high), 106.40 (100-day SMA), and 105.89 (resistance from June 2024). With the Relative Strength Index (RSI) showing room for further downside, the 200-day SMA at 104.93 could become a potential target.
