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Fundamentals

During the Asian session on Tuesday (June 13), the dollar index fluctuated to the downside, currently trading around 103.3. As the demand for a technical rebound was needed after the sharp decline last Thursday, the dollar index rebounded from a two-week low on Friday. However, USDX is towards the downside today after rebounding for two consecutive days, with a black body covering two white bodies, technically biased toward bears. However, bulls and bears will shift in a flash, as more investors are waiting for today's inflation data and tomorrow's Fed interest rate decision to look for any new clues about how high the Fed's terminal interest rate may be. Currently, the Fed is widely expected to leave interest rates unchanged in June. However, the hawkish stance may also be reinforced by a fiery CPI report before Wednesday's decision.

Investors need to pay attention to tonight's inflation data and tomorrow's interest rate decision, as well as the US retail sales monthly rate for May, the US PPI data for May, the US industrial output monthly rate for May, the preliminary University of Michigan consumer confidence index for June and other heavy economic data, which are known as "grisly data".

New: Most economists surveyed by Bloomberg believe that the Federal Open Market Committee (FOMC) will leave the federal funds rate unchanged at its June 13-14 meeting in the 5%-5.25% range. Policymakers still face greater disagreement on whether to raise rates in July, even as the US economy remains resilient and inflation remains persistently high. Fed Chairman Jerome Powell hinted at a pause in tightening last month, which means he prefers to wait a while to assess the impact of previous rate hikes. As this impact is often lagging, it is important to look at the possible impact on credit markets from the recent collapses of the three banks.

Technical Analysis

Trading at the daily timeframe, as the MA5 crosses the MA10 as well as the MA20 downwards, with a long black body today covering the small white body of the previous two days, a bearish signal is present technically. At the same time, the dollar index is pressed by the MA5, MA10, and MA20, and the short-term bullish momentum has weakened significantly. Besides, as the death cross formed by MACD expanded,  USDX was also biased toward bears in the short term. Initial resistance is around 103.8 and initial support is around 102.7.

The current price is bearish during the day. If there are no surprises, tonight's blockbuster data will reinforce the bearish trend in prices. Conservative traders can watch and wait for the data to come out before proceeding. Aggressive traders can take short positions around the MA5 with the stop loss at 103.8. The first target of taking profit is 102.7, at which price level, traders can reduce positions partially and move the stop loss to breakeven. The second target is to look at 102.

Trading Recommendations

Trading Direction: Short

Entry Price: 103.300

Target Price: 102.600

Stop Loss: 104.600

Support: 103.000/102.600

Resistance: 104.600/105.800