The USD Index keeps going down below 106.00 and is now looking at some PCE data and a shutdown

The Greenback Takes a Dip

 

USD Index Retreats

 

The greenback, which is tracked by the USD Index (DXY), is dropping below the 106.00 support level at the end of the week. This is the second session in a row that the index has retreated.

 

Reasons for the Drop

 

The dollar is facing selling pressure after reaching its highest point in 2023, near 106.80 on September 27. This drop is due to the index being overbought recently, with the daily RSI going well past the 70 threshold. Some investors are also taking profits, and there is a slight increase in risk appetite.

 

Other Factors

 

Aside from these reasons, the overall monetary policy remains the same. However, concerns about a potential federal government shutdown are also weighing on the greenback as the September 30 deadline approaches.

 

What’s Happening in the US

 

Today is an interesting day for the US economy. The focus will be on inflation, specifically the PCE and Core PCE. Other important data includes Personal Income, Personal Spending, advanced Goods Trade Balance, and the final gauge of the Michigan Consumer Sentiment. Additionally, NY Fed John Williams is scheduled to speak.

 

Further Drop in the Greenback

 

The drop in the greenback seems to be gaining momentum as it breaks below the 106.00 support level on Friday.

 

Support for the Dollar

 

Despite the recent drop, the US economy remains strong, which provides support for the dollar. The Federal Reserve’s stance of keeping interest rates low for a longer period of time also contributes to this support.