US Dollar (USD) Price Weakness Continues as Global Growth Prospects Sour
05 Jun 2019 11:00, GMTWhat's on this page
US Dollar News: USD Price Analysis and Charts.
- US interest rate cuts continue to be priced-in to the US dollar.
- Support nears as the market flashes a strong oversold signal.
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US Dollar (DXY)Looking for Support
The greenback remains under selling pressure as market expectations of upcoming US interest rate cuts continue to be baked into the price. Recent Fed commentary suggests that inflation remains muted and that the FOMC are ready, and willing, to act to boost domestic price pressures. In addition, the World Bank Tuesday said that they expected global growth to slow to 2.6%, ‘reflecting weaker-than-expected trade and investment at the start of the year’. The report added that ‘risks are firmly on the downside, in part reflecting the possibility of a further escalation of trade tensions’.
The US dollar basket (DXY) is currently trading at a six-week low, as rate cut expectations increase and US Treasury yields fall. The US yield curve is inverted between UST 1-year and UST 10-years, a market signal that lower interest rates are needed in the near-term. Markets are currently pricing in round 64 basis points of US interest rate cuts in 2019.
The daily chart shows the US dollar long-term uptrend under pressure with price action nearing the 200-day moving average. Apart from three false breakouts – two in January and one in mid-March – this long-term ma has supported the greenback and the market is currently setting up for another break lower. A potential catalyst for this next move may come this Friday with the monthly US Labor Market Report (Non-Farm Payrolls).
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The US dollar may find some short-term support from the CCI indicator that is warning that the market is heavily oversold at current levels.
US Dollar (DXY)Daily Price Chart (May 2018 – June 5, 2019)
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--- Written by Nick Cawley, Market Analyst
To contact Nick, email him at nicholas.cawley@ig.com
Follow Nick on Twitter @nickcawley1
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.