US Dollar Index enroute to 111


ISM report for September is substantially weaker than anticipated. This has sparked doubts about the DXY’s capacity to maintain its longer-term bullish tilt. Increased inflationary pressures have reduced home retail demand, which has ultimately led companies to stop using all of their available capacity, and as a result, the scope of manufacturing activity is falling in the US economy.

US ISM report dropped to 50.9 from 52.2 consensus expectations where the previous data was 52.8. Additionally, the weaker New Orders Index data fell. Compared to forecasts of 49.6 and the prior reading of 51.3, the economic indicator that measures the future demand for manufacturing operations fell to 47.1.

Looking at the 4-hour chart, the dollar index has fallen from the 114.70 high and is now currently trading at 111.60 at the time of writing. The immediate resistance lies at 112.50 and since the single currency is having a hard time to break this level, DXY has weakened. In case the latter is broken, retest of September 2022 high cannot be ruled out.

On the downside, support is currently at 111.50. US NFP data’s lower consensus is currently being discounted by the market participants which can possibly lead to DXY decline towards its next support at 111.00. A subsequent break can expose the asset to 110.60.

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