USD Index: Pressured near 103.00 as Debt Limit Talks and Meeting Minutes Approach

In the Asian market on Monday, the US dollar index remained near the intraday lows around 103.00, maintaining its pullback since reaching multi-day highs last Friday, due to concerns over the US debt ceiling negotiations and the Federal Reserve. The performance of the US dollar index against major currencies also reflects market preparation for key data/events this week.

In the latest bearish news for the US dollar, the inability of US policymakers to reach a debt ceiling agreement takes the spotlight, while comments from Federal Reserve officials remain divergent.

According to Reuters, US President Joe Biden and House Republican Leader Kevin McCarthy are set to meet on Monday to discuss the debt ceiling issue. Prior to this meeting, they had a “productive” phone conversation when the President returned to Washington, as cited by Reuters. It should be noted that Republicans are not very optimistic and had suspended talks earlier over the weekend.

In other news, Federal Reserve Chair Jerome Powell emphasized concerns about inflation on Friday, but also mentioned that the recent banking crisis has led to tighter credit standards, easing the pressure for interest rate hikes. This development has had an impact on bets on the Fed's hawkish stance, allowing the US dollar bulls to catch their breath.

It should be noted that due to positive US economic data and hawkish comments from Federal Reserve (Fed) officials last week, market expectations for a 0.25% interest rate hike in June by the Fed have recently increased, while calls for rate cuts in 2023 have decreased. This has fueled optimism among US dollar bulls ahead of key catalysts.

Against this backdrop, US stocks closed slightly lower, with S&P 500 futures following the overnight decline in US stocks, while US bond yields edged higher.

Looking ahead, the focus for forex traders will be on the upcoming Federal Reserve meeting minutes, preliminary May PMI data, and the core Personal Consumption Expenditures (PCE) Price Index, which is a favored inflation indicator by the Fed. Of utmost importance will be the resolution of the US debt ceiling, as it will determine the short-term outlook for the US dollar. If US policymakers manage to extend the debt ceiling, the US dollar index may experience further upside.

Technical Analysis

Although currently experiencing a decline, the bearish momentum in the US dollar index would need confirmation from support at the 100-day moving average, currently located around 102.85, for the bears to regain control.

USD Index Spot

Overview

Latest Price: 103.05

Day's Change: -0.14

Day's Change %: -0.14

Open: 103.19

Trends

20-day Moving Average: 101.99

50-day Moving Average: 102.31

100-day Moving Average: 102.89

200-day Moving Average: 105.72

Levels

Previous Day High: 103.62

Previous Day Low: 102.99

Weekly High: 103.63

Weekly Low: 102.2

Monthly High: 103.06

Monthly Low: 100.79

Daily Chart 38.2% Fibonacci Retracement Level: 103.23

Daily Chart 61.8% Fibonacci Retracement Level: 103.38

Daily Chart Pivot Support 1: 102.92

Daily Chart Pivot Support 2: 102.64

Daily Chart Pivot Support 3: 102.29

Daily Chart Pivot Resistance 1: 103.54

Daily Chart Pivot Resistance 2: 103.9

Daily Chart Pivot Resistance 3: 104.17