The US Dollar (USD) did not get much time to enjoy the party over its eleventh straight week of gains. Last week was a close call as the US Dollar Index (DXY) was able to lock in its gains only in the last few trading hours. Although the US government shutdown might be solved for now, with the US Congress pushing the budget showdown to November, the can has merely been kicked down the road for roughly six weeks. On the data front, the current stance of the US Federal Reserve got confirmed yet again with the Personal Consumption Expenditures (PCE) index on Friday. Although headline PCE saw energy adding to inflation, the Core numbers pointed to further abating inflation. The question for this Monday will be how the Purchasing Managers Indices (PMI) will behave, as a further decline into contraction might start to hurt.
The US Dollar Index booked its eleventh straight weekly gain on Friday. Although the US Dollar is firmly in the green again, several banks are mentioning they are seeing US Dollar selling within this rally. With a chunky batch of data set to come out this week, including the US jobs report on Friday as cherry on the cake, the DXY might see its rally come to an end. The US Dollar Index opened around 106.21, though the overheated Relative Strength Index (RSI) is acting up again and heads back into an overbought regime. Traders that want to hit a new 52-week high need to be aware that a lot of road needs to be covered toward 114.78. Rather look for 107.19, the high of November 30, 2022, as the next profit target on the upside. On the downside, the recent resistance at 105.88 should be seen as the first support. Still, that barrier has just been broken to the upside, so it isn’t likely to be strong. Instead, look for 105.12 to do the trick and keep the DXY above 105.00.
