US Dollar, DXY Index, USD, Treasury Yields, Debt Ceiling, Crude Oil – Talking Points
- The US Dollar might get a jolt this week on a debt debacle resolution
- Treasury yields remain robust and equity markets have been given a small boost
- If the need for a haven currency diminishes, where will that leave USD?
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The US Dollar is steady at the start of the week as markets digest the possibility of a debt ceiling deal being passed by Congress this week.
Over the weekend, US President Joe Biden and House Speaker Kevin McCarthy both said that the two of them have come to an agreement and it will be voted on in the next few days.
Both sides appear to have compromised in order to avoid a default for the US. Treasury has said that they could run out of cash by June 5th if the ceiling wasn’t lifted in time.
The resolution of the debt ceiling issue might be seen as negative for the US Dollar due to perceptions that it had been bought as a haven asset. However, Treasury yields have also been heading north with the 1-year bond touched 5.30% on Friday, almost 130 basis points up from its March low.
Wall Street futures are pointing slightly higher after the main indices posted stellar gains on Friday after some encouraging economic data. Most notably, durable goods orders, personal spending and consumer sentiment all beat estimates. The full breakdown can be found here.
APAC equities have been mixed but are mostly in the green and crude oil has recovered today after tumbling to close out last week. The WTI futures contract is back over US$ 73 bbl while the Brent contract is near US$ 77.50 bbl. Gold is struggling to start the week, trading near the 2-month low under US$ 1,950.
It might be a quiet trading day ahead with the UK, Switzerland and the US on holiday today.
The full economic calendar can be viewed here.
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DXY (USD) INDEX TECHNICAL ANALYSIS
The DXY index appears to have created a Doji candlestick on Friday, which may indicate market indecision about direction.
Since breaking above a descending trend line, the price has been on a bullish run to mark an 11-week high. Resistance might be at the 76.4% Fibonacci Retracement at 104.79.
On the downside, support may lie at the breakpoints of 103.60 and 102.80.
— Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCarthyFX on Twitter