The US Dollar (USD) is rebounding on Tuesday after Monday’s losses, fueled by safe-haven buying as global equity markets experience a sell-off.
Market Drivers:
- Risk Aversion: A negative turn in major equity markets, including a significant drop in India’s Nifty index, is sparking a flight to safety towards the USD.
- JOLTS Job Openings Report: Investors are awaiting the key US JOLTS Job Openings data for April, which could confirm concerns about a slowdown in the US economy.
- Lagging Indicator: While the JOLTS report is a lagging indicator, a continued decline in job openings could suggest the end of the US economic boom.
Technical Analysis (USD Index):
- Short-Term Bounce: The USD Index (DXY) might be experiencing a temporary rise above 104.00 due to risk aversion, but this may not reflect the underlying economic situation.
- Key Resistance Levels: On the upside, the DXY faces resistance at the 200-day and 100-day SMAs (around 104.4) and the 104.60 level.
- Support and Downside Potential: The 104.00 level is currently acting as support. A break below could lead to further declines towards 103.50 or even 103.00.
- RSI Not Oversold: The Relative Strength Index (RSI) suggests the USD has room for further downside movement.
Overall:
The US Dollar’s rebound is likely a temporary reaction to risk aversion in the markets. The upcoming JOLTS data and the overall economic outlook could still weigh on the USD in the coming weeks. The technical indicators also hint at potential downside risks for the USD Index.
