The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
How bad will US PMI be?
The US PMI will be released on May 1 at 17:00 MT.
Instruments to trade: EUR/USD, USD/JPY, USD/CHF, AUD/USD, USD/CNH, USD/CAD
The US Manufacturing PMI reveals the survey of 400 purchasing managers, who rate current business conditions. If the PMI is above 50.0, it will indicate the industry expansion, below – the industry contraction. It’s clear that PMI will plummet amid the national lockdown. Analysts forecast the US PMI to drop to 37 in April and that would not be the bottom. However, the US dollar is not supposed to be sensitive to this drop as it plays a role of a safe-haven currency these days. That’s why USD won’t fall so deep as the US PMI.
If PMI is greater than it was expected, USD will typically increase, otherwise – decrease.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
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This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.