On Tuesday, analysts from ING have projected that the US Dollar Index (DXY) is likely to maintain its current levels, with a consolidation range between 105.75 and 106.50. Despite this period of stabilization, they maintain a bullish outlook on the currency.
The dollar has recently paused its upward trajectory and entered a phase of consolidation following its gains last week. This week, the market's focus is on the upcoming release of the March core Personal Consumption Expenditures (PCE) price index, a key indicator of inflation that could influence short-term US Treasury yields. Investors are particularly drawn to US two-year Treasury yields, which are currently at an appealing 5% in light of the current geopolitical uncertainties.
The ING analysts suggest that today's release of the US April Purchasing Managers' Index (PMI) and new home sales data is unlikely to significantly affect the dollar's performance. They also mention the possibility of large-scale foreign exchange intervention by Asian central banks, which might be deterring investors from increasing their long positions in the dollar.
The consolidation range indicated by ING reflects a period where the dollar is expected to fluctuate within these levels before potentially resuming its upward movement. The statement from ING's Global Head of Markets and Regional highlights that, while immediate data may not sway the dollar significantly, the broader economic context and interventions could play a role in its trajectory.
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