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27/06/24
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Upcoming PCE Index Data Important for the USD
The uncertainties regarding the USD and Fed are still weighing on markets as attempts to tame inflation may continue. Economic data from the United States over the past month has not been conclusive, prompting support for immediate rate cuts as well as a cautious stance.
Some market participants believe that the upcoming Federal Reserve’s preferred inflation gauge will be adequate enough to compel the apex bank to provide a more decisive tone. The Personal Consumption Expenditures (PCE) Price Index is a measure of the average increase in prices for all domestic personal consumption and includes all expenditures. Hence, it offers a more all-inclusive view of inflationary pressures.
The key data is considered a good means of predicting the path of the USD and monetary policy. The PCE index has been falling sharply since early last year but appears to have plateaued in recent times. A continuous decline in the data may prompt market participants’ adjustments in their anticipation for a rate cut. A rise in the PCE index is likely to provide strength for the USD.
A look at the daily chart of the U.S. Dollar Index (DXY) shows a solid retracement to the 106 handle. The major barrier level at the 107 zone is still holding firm and may not be breached in the near-term. There may be a sustained break in the major barrier level if the PCE data misses towards the downside tomorrow.
The chart shows that there are three support levels on the way downward, including 105.63, 105.00, and 104.50, while there are three barrier levels at 106.50, 107.00 and 108.50 on the way upward.
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