US Dollar (DXY) Rate, Chart and Analysis
- The latest US growth and inflation data will be released this week.
- Fed speaking break ahead of the FOMC meeting on 3 May.
The first look at US Q1 GDP and the latest core PCE data are the highlights of a busy week for the US dollar as traders prepare for next week’s FOMC rate decision. Financial markets are expecting a 25-basis point rate hike on 3 May (86% probability) before the central bank pauses for the next three meetings. The first rate cut in the US is currently expected for the 1 November meeting, but this may change depending on this week’s economic data. There will be no comment from the Fed before next week’s FOMC meeting.
US bill and bond yields are marginally lower today: the 3-month T-bill is trading at 4.96%, down from 5.09% last week, while the 2-year US Treasury note is trading at 4.15%, down from a multi-week high of 4.29% last Wednesday. Yields on short-dated US debt have been driven up recently by higher interest rate expectations and fears over the looming US debt ceiling. The US 10-/2-year bond curve has inverted by 61 basis points, a persistent signal that the market expects the US to enter a recession this year.
Current price action in the US dollar is limited and confined to a narrow short-term trading range. The greenback is testing support around 101.10 and a break below this level would see 101.00 and then the 100.40-100.60 area as the next technical support levels. The US dollar has repeatedly attempted to rise above the 20-day moving average in recent days, highlighting the greenback’s current weakness.