U.S. Dollar Index Ends The Week Lower But Holds Onto 2022 Gains
The U.S. dollar, measured by the DXY index closes the last trading week of 2022 with losses, posting the third consecutive weekly decline in the absence of high-impact macroeconomic data releases and amid thinned-holiday volume.
At the time of writing, the DXY trades at the 103.50 area, 0.25% below its daily opening price and 0.73% lower in the week.
ISM and S&P Global PMI data EU and U.S. will be on the economic docket for the first week of 2023, but more crucially, the United States will release its December nonfarm payrolls report, which could influence the expectations regarding the Fed's decision on February 1. As for now, investors are betting on higher probabilities of 69.7% of a 25 bps hike and 30.3% odds of a 50 bps increase.
From a technical perspective, although the DXY index holds a short-term negative bias, the broader picture remains bullish as the price holds above an ascending trendline drawn from May 2021 lows.
Still, the index has staged a steep downward correction throughout the last quarter of the year, weighed by expectations (and realization) of a less aggressive Federal Reserve, which sent the DXY from a 20+-year high of 114.78 in September to current levels around 103.50 to close the year.
The DXY however, holds on to an over 8% gain in 2022. A break below the mentioned trendline of around 102.00 could deteriorate the longer-term picture. Conversely, a recovery above the 20-week SMA at around 108.50 could re-ignite the bullish trend.
At the time of writing, the DXY trades at the 103.50 area, 0.25% below its daily opening price and 0.73% lower in the week.
ISM and S&P Global PMI data EU and U.S. will be on the economic docket for the first week of 2023, but more crucially, the United States will release its December nonfarm payrolls report, which could influence the expectations regarding the Fed's decision on February 1. As for now, investors are betting on higher probabilities of 69.7% of a 25 bps hike and 30.3% odds of a 50 bps increase.
From a technical perspective, although the DXY index holds a short-term negative bias, the broader picture remains bullish as the price holds above an ascending trendline drawn from May 2021 lows.
Still, the index has staged a steep downward correction throughout the last quarter of the year, weighed by expectations (and realization) of a less aggressive Federal Reserve, which sent the DXY from a 20+-year high of 114.78 in September to current levels around 103.50 to close the year.
The DXY however, holds on to an over 8% gain in 2022. A break below the mentioned trendline of around 102.00 could deteriorate the longer-term picture. Conversely, a recovery above the 20-week SMA at around 108.50 could re-ignite the bullish trend.
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