The US dollar is trading lower against a basket of major currencies, but a striking distance from a 24-year high on Wednesday, shortly after the release of a report on producer price inflation in the United States (PPI) which showed a decline for a second consecutive month in August. . Although the index is down, a rise in Treasury yields is providing support.
Slight drop in PPI
The producer price index, an indicator of prices received at the wholesale level, fell 0.1%, according to a report from the Bureau of Labor Statistics on Wednesday. Excluding food, energy and commercial services, the core PPI increased by 0.4%.
Economists polled by Dow Jones expected the overall PPI to fall 0.1% and the core to rise 0.3%.
At 13:27 GMT, September US Dollar Index futures are trading at 109.570, down 0.239 or -0.22%. On Tuesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $29.45, up $0.41 or +1.41%.
Fed rate hike expectations almost unchanged after PPI data
After the PPI report, the odds of a 75 basis point rate hike at next week’s Fed meeting rose from 66% to 68%. The probability of a full one percentage point rate hike has increased from 34.0% to 32.0%.
September US Dollar Daily Index
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, the momentum has been trending down since September 7th.
A trade through 107.480 will change the main downtrend. A move to 110.785 will signal a resumption of the uptrend.
The minor trend is down. This confirms the change in dynamics.
The short-term range is 107.480-110.785. The index is trading on the strong side of its 50% level at 109.133, making it a support.
The main support is the long-term Fibonacci level at 107.780. This is followed by a support zone at 107.650 to 106.910.
Daily Swing Chart Technical Forecast
Traders’ reaction to the short-term pivot at 109.133 is likely to determine the direction of the US Dollar Index from September through Wednesday’s close.
A sustained move above 109.133 will indicate the presence of buyers. Pulling back 109.920 will indicate that buying is strengthening. This could trigger an acceleration towards 110.785.
A sustained move below 109.133 will signal the presence of sellers. If this generates enough downside momentum, look for a sharp break in major support at 107.780, followed by a cluster of support at 107.670 at 107.650, and the main low at 107.480. For an overview of all of today’s economic events, check out our economic calendar.
This article originally appeared on FX Empire
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