DXY: the defining levels


As we suggested in our yesterday's review, the main dollar currency pairs spent yesterday in ranges. There is also no important news on the economic calendar today. They will appear tomorrow, when at 12:30 (GMT) fresh data on consumer inflation in the US will be published.

As expected, the Consumer Price Index (CPI), which determines the change in prices of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and changes in consumer preferences, will be released in July with a value of +0.2% and + 8.7% (in annual terms).

Core CPI (food and energy excluded from this indicator for a more accurate estimate) will be released at +0.5% and +6.1% (on an annualized basis), which indicates continued inflationary pressure in the US economy.

Theoretically, the data better than the forecast should strengthen the dollar, because they will indicate the need for further action on the part of the Fed to curb high inflation.

At the same time, the continuing growth of inflation in the US speaks of the low effectiveness of the actions taken by the FRS so far. Therefore, the reaction of the market to this publication can be completely unpredictable.

However, the market is still dominated by the general medium-term trend of dollar weakening. Thus, the DXY dollar index has been in a downward correction for the 26th day, after it reached a local maximum since October 2002 at 109.14 in the middle of last month.

In general, the dollar holds its positions in the foreign exchange market, but in the medium term, as we can see, it is declining. At the beginning of today's European trading session, the DXY dollar index is near 105.95, 37 points below the closing price of the previous trading day.

The signal for the resumption of long positions in DXY futures will be a breakdown of the resistance levels 107.00, 108.00, and for short positions - a breakdown of the support level 105.00.