US Dollar Index News: DXY Faces Headwinds with: China, Geopolitical Risk in Focus

Highlights

• China’s Q3 GDP beats expectations, affecting dollar.
• Geopolitical tension in Gaza impacts currency market.
• U.S. retail sales up, but rate hike uncertainty looms.

Dollar’s Momentum Checked by Geopolitical Events and China Data

The U.S. dollar’s recent rally showed signs of stalling as better-than-expected economic growth in China and geopolitical tensions in Gaza weighed on the currency. China’s Q3 GDP outperformed market expectations, growing 1.3%, while industrial output increased and unemployment rates dropped. Meanwhile, the conflict between Israel and Hamas added an element of caution among traders.

Currency Dynamics

At 13:13, the U.S. Dollar Index, which measures the greenback against six major currencies, was up marginally at 106.303. This comes after the index recently touched an 11-month high of 107.34. While currencies like China’s yuan and the Australian and New Zealand dollars initially strengthened, they later pared their gains.

Rate Uncertainty

Economic data from the U.S. painted a mixed picture. Retail sales for September increased by 0.7%, significantly outpacing the 0.3% forecast. Despite this positive data, the future of Federal Reserve interest rate policy remains uncertain. The market is pricing a 90% chance of rates remaining unchanged in November, but expectations for a December rate hike have increased.

Short-Term Forecast: Cautiously Bullish

The U.S. dollar appears poised for modest gains in the near term, albeit with potential headwinds from geopolitical risks and global economic data. With both bullish and bearish factors in play, traders should proceed with caution.

Technical Analysis

The 200-day moving average for the U.S. Dollar Index (DXY) is at 103.252 and the 50-day moving average is at 104.964. The current daily price of 106.341 is above both these averages, suggesting bullishness both in the long-term and short-term perspectives.

It’s hovering just above minor support at 105.628 and is approaching minor resistance at 106.904. While the asset is well above the main support level of 103.573, it is yet to challenge the main resistance at 107.970. Given these factors, the market sentiment for the U.S. Dollar Index appears cautiously bullish.