DXY: short-term market expectations
As of this writing, DXY futures are traded near 106.95 mark, 76 pips below the opening price earlier this week. And yet, despite the weakening observed at the beginning of the week, given the strong bullish momentum and the long-term uptrend in DXY, the breakdown of the local resistance level 109.00 will be a signal to increase long positions in DXY futures "with the prospect of growth towards multi-year highs of 121.29 and 129.05, reached, respectively, in June 2001 and November 1985".
On the dollar next week is expected to publish a number of important macro statistics. On Wednesday, July 27 (at 18:00 GMT), the Fed's decision on interest rates will be published, the significance of which for the dollar and, perhaps, the entire financial market can hardly be overestimated.
Market participants expect the US central bank to accelerate the tightening cycle of monetary policy. It is widely expected that at this meeting the rate will again be increased at once by 0.75%, to 2.50%. During the publication of the rate decision, volatility may rise sharply throughout the financial market, primarily in the US stock market and in dollar quotes, especially if the rate decision differs from the forecast or unexpected statements are received from the Fed management.
And among the important news from the economic calendar for today, it is worth paying attention to the publication at 13:45 (GMT) of the PMI indices (from S&P Global) in the US manufacturing and services sector for July, which are an important indicator of the state of the US economy as a whole, and here a slight relative decline is expected: 52.0 for manufacturing PMI (from 52.7 in June) and 52.6 for services PMI (from 52.7 in June). Despite the decline, the indicators are above the value of 50, which separates the increase in activity from the slowdown.
This will probably not have a strong negative impact on the dollar. In general, it continues to dominate the currency market, although it may close this week in negative territory.