The US Dollar[1] Index (DXY) struggles to retain the advance following the Federal Reserve interest rate decision[2] as a slew of Fed officials endorse a dovish forward guidance for monetary policy, but fresh data prints coming out of the US may prop up the Greenback as employment is expected to increase for the sixth consecutive month.
Fundamental Forecast for US Dollar: Neutral
The breakout in the US Dollar Index (DXY) appears to have stalled after testing the resistance objective at 92.46[3], and the Greenback may consolidate over the remainder of the month as the Federal Open Market Committee[4] (FOMC) stays on track to “increase our holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month.”
The testimony from Chairman Jerome Powell[5] suggests the FOMC is in no rush to scale back its non-standard tools as the central bank head tells US lawmakers that “the Fed will do everything we can to support the economy for as long as it takes to complete the recovery.” The remarks largely align with the dovish speech by New York Fed President John Williams[6] as the permanent voting-member on the FOMC emphasizes that “conditions have not progressed enough for the FOMC to shift its monetary policy stance,” and it remains to be seen if the update to the US Non-Farm Payrolls (NFP[7]) report will sway Fed officials as the economy is anticipated to add 675K jobs in June.
At the same time, the Unemployment Rate is expected to narrow to 5.6% from 5.8% in May, and a further improvement in the labor market may spark a bullish reaction in the Greenback
