Dollar Hits 100.65 Resistance Despite Weak Chicago Fed Data
The US Dollar Index approaches 100.65 as traders ignore weak Chicago Fed activity data and focus on hawkish Federal Reserve expectations.
Key points
- US Dollar Index approached 100.65 resistance despite Chicago Fed activity falling to negative 0.04 in August.
- FedWatch tool indicates a 53.1 percent chance of a Federal Reserve rate hike at the next October meeting.
- EUR/USD and GBP/USD fell as crude oil prices dropped below key 95.00 and 100.00 dollar thresholds.
The US Dollar Index climbed toward the 100.65 resistance level on Tuesday. This move occurred despite the Chicago Fed National Activity Index falling to negative 0.04 in August. The decline disappointed markets that had forecast a positive 0.2 reading for the period.
Traders remained bullish on the greenback because of expectations for tighter monetary policy. The FedWatch tool now shows a 53.1 percent probability of a rate hike in October. This hawkish outlook outweighed concerns about slowing economic activity indicated by the latest data.
Euro and Pound Face Technical Headwinds
EUR/USD fell as WTI crude oil dropped below the 95.00 dollar mark. Brent crude also settled under the 100.00 dollar threshold, removing a supportive factor for the euro. The pair now risks testing the 1.1420 to 1.1435 support zone if it closes lower.
GBP/USD retreated amid general dollar strength across major currency pairs. Traders focused on the broader US macroeconomic environment rather than UK specific news. The pair faces immediate resistance at 1.3400 to 1.3415 before reaching the 50 moving average.
Commodity Currencies React To Metal Pullback
USD/CAD tested new highs as precious metal prices weakened. The pair successfully settled above the 1.3985 to 1.4000 resistance level. Traders now watch the 1.4030 level for a potential breakout toward 1.4065 to 1.4080.
Yen Remains Under Pressure From Rate Expectations
USD/JPY gained ground even as two-year Treasury yields declined to 4.74 percent. The ten-year yield settled near 4.96 percent, reflecting mixed bond market signals. Traders ignore this yield pullback in favor of betting on higher US rates.
The yen pair moves closer to the 157.50 level before hitting major resistance at 158.00 to 158.50. A break above this zone would expose the 160.00 to 160.50 range. Market participants watch for potential Bank of Japan intervention near these critical levels.
