US DOLLAR AND NASDAQ 100 OUTLOOK:
- The U.S. dollar, as measured by the DXY index, loses ground on Monday, despite the rally in U.S. yields
- Meanwhile, the Nasdaq 100 posts moderate losses after failing to clear technical resistance AT 13,370
- The U.S. debt ceiling drama and the April inflation report will take the spotlight this week
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The U.S. dollar, as measured by the DXY, index was a tad weaker on Monday despite the advance in U.S. Treasury yields seen across the curve following better-than-expected nonfarm payrolls data last Friday and higher oil prices over the past two trading sessions.
Meanwhile, the Nasdaq 100 was also subdued, sliding about 0.3% to 13,280, pressured by the rally in bond rates, with upward momentum fading and bulls failing to push the tech index above technical resistance at 13,370 ahead of a loaded economic docket.
Two key events are likely to grab the spotlight this week: 1) a White House meeting between the President and several lawmakers to discuss the U.S. borrowing cap and 2) the April U.S. inflation report.
Focusing on the first item, President Biden will host House Speaker Kevin McCarthy, House Minority Leader Hakeem Jeffries and senior Senate figures representing both ends of the political spectrum on Tuesday to address the impasse over raising the debt ceiling.
With the Treasury Department expected to run out of cash to pay its bills as early as June 1, President Biden needs to negotiate a deal soon to prevent the U.S. from heading toward default, a situation that could prove catastrophic for the global economy and financial system.
Turning our attention to the second item, the U.S. Bureau of Labor Statistics is due to release consumer price index data from the previous month on Wednesday morning. In terms of expectations, headline CPI is seen rising 0.4% m-o-m, keeping the annual rate steady at 5.0%.
For the Fed's monetary policy outlook to stay dovish, as priced in by Fed futures, inflation must remain on a downward path. Should CPI numbers surprise to the upside, rate cut expectations for the second half of 2023 could fade, boosting yields and the U.S. dollar. This would be bearish for the Nasdaq 100.
US DOLLAR TECHNICAL OUTLOOK
After the recent pullback, the U.S. dollar, as measured by the DXY index, is steadily approaching technical support at 100.75, near the 2023 lows. If the bears manage to drive the greenback index below this floor, we could see a move toward 99.50 in short order.
On the flip side, if prices get repelled from current levels and turn higher, initial resistance appears at 102.30. A successful climb above this barrier could embolden buyers to launch an attack on the 50-day moving average, followed by 103.50.
US DOLLAR (DXY) TECHNICAL CHART
DXY Chart Prepared Using TradingView
| Change in | Longs | Shorts | OI |
| Daily | 2% | 2% | 2% |
| Weekly | 11% | -14% | -1% |
NASDAQ 100 TECHNICAL CHART
The Nasdaq 100 rallied aggressively last Friday, but fell short of clearing technical resistance at 13,370, near the 2023 peak. Failure to follow through on the topside appears to be attracting sellers on Monday, with the tech index retreating from its recent highs – a sign bullish impetus may be waning.
If the pullback accelerates in the coming days, the first key support to keep an eye on rests at 13,000-12,950. If bulls fail to defend this floor, we could see a drop toward 12,635 soon. Conversely, if the index resumes its ascent and breaches 13,370, prices could be on their way to test 13,735 imminently.
NASDAQ 100 TECHNICAL CHART
