U.S Dollar Index Futures Technical Analysis: CPI Report Vital to Week Ahead as Federal Meets

Friday witnessed the United States dollar presenting a minor gain against several leading currencies. That followed a hotter-than-anticipated US PP1 (producer price index). Meanwhile, volume remained light as most leading players took the data in stride while bracing for Tuesday’s U.S. consumer price index.

The CPI report tends to have more impact than the producer price index’s data. Moreover, it’s the final notable economic stat Federal officials will have before starting their 2-day financial policy conference later that day.

United States Dollar Index futures hovered at 104.799 on Friday, up +0.04% or 0.043. Meanwhile, the Invesco DB U.S DXY Bullish Fund ETF settled at around $28.36, up +0.19% or $0.06.

PPI Data

The United States PPI (producer price index) gained 0.3% in November, beyond the 0.2% estimate, for a 7.4% Y/Y increase (Friday’s Labor Department reports). The PPI without trade services, energy, and food soared by 0.3%, surpassing market forecasts.

Dollar Up Against the Euro

The Euro declined by 0.21% against the Dollar, whereas the British pound surged by 0.27%. Meantime, the USD/JPY dropped 0.06% as the CAD recorded a 0.38% gain.

Near-Term Outlook

Though the PPI rise was a surprise, it will unlikely derail the Federal Reserve’s anticipated plan to execute a 50 basis point rate hike after increasing the benchmark by 75bp for four successive meetings. Nevertheless, there’s hesitation over when the Federal will quit hiking interest levels and the potential rate peak.

Market players will closely watch the consumer price index on Tuesday. Meanwhile, economists expect it to show lowering inflation. A stronger-than-anticipated reading will prompt chaos within the marketplace, sending the USD higher against other currencies.

Considering the surprisingly stable NFP, services & factory reports, the Federal may have to retain the aggressive policy stand.

Daily Chart Analysis

The 24hr swing chart shows the primary trend displaying a southward outlook. Meanwhile, a move past 105.800 will welcome upside trends, whereas a dip beneath 103.935 will mean a downward trend resumption.

The closest resistance stands at 104.868 (minor pivot), then 105.545. Meanwhile, the primary resistance hovers at 107.780. The currency has the nearest support at 102.950 – 16 June’s bottom.

Daily Chart Forecast

Trader response to the 104.868 minor pivots will likely influence Monday’s early tone. Let us assess the bullish and bearish cases.

Bearish Case

A sustained downward move beneath 104.868 will confirm selling activities within the market. Adequate downward movement amid such a move would welcome a test of the primary bottom at around 103.935. Meanwhile, continued weakness at this mark would bring 102.950 into play.

Bullish Case

Improved actions beyond 104.868 will suggest buyer presence within the market. That might catalyze a swift rally to 105.543 before exploring 105.800. Overtaking the 105.800 mark will welcome an upward trend. That can catalyze an upside acceleration toward the next target of 107.150. Further upside will push to the 107.780 – 107.895 resistance cluster.

Traders use the DXY (U.S Dollar Index) when assessing USD value against other currencies that U.S trade partners use. The index surges whenever the USD strengthens against these currencies & vice versa.

Enthusiasts can plan their DXY technical analysis by following its price charts and keeping up with updated market actions with news, dollar index predictions, and advice pieces.

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