USDMXN Higher after Mexico Consumer Confidence beat Forecasts
The sentiment on the US Dollar index (DXY or USD Index) remains bearish as the US Dollar continues to be sold off across the board this Monday. A slightly upbeat consumer sentiment report by the New York Federal Reserve bank (NY Fed) did little to help the DXY, which is fast sliding to the 96.0 mark.
The NY Fed Survey of Consumer Expectations for May 2020 shows that US consumers expect a rise in the cost of food and gasoline by 8.7% and 7.8%. A lower percentage of Americans (38.9% versus the previous figure of 47.6%) expect higher unemployment in a year. Expectations for labour market conditions and personal financial situation showed an improvement in May over April’s numbers. Perception of the probability of personal job loss declined to 18.7%, and perceived risk of debt repayment default dropped steeply.
Despite a slight recovery by the DXY earlier in the session, it has dipped once by 0.21%on the day and now trades at 96.75.
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Friday’s Non-Farm Payrolls report allowed the DXY to bounce off the support at 96.46, but it seems that the downward pressure has set in once more. The initial target for the downside move continues to remain at 96.46. A breakdown of this area allows the DXY to aim for the 12 March 2020 lows at 96.07, with the 95.72 (6 March low) and 95.19 price levels constituting further support levels.
On the flip side, recovery of the DXY may need a bounce from the 96.467 price level, which targets 97.16 initially and 97.71 further down the road. 98.19 and 98.60 complete the short-term target areas, with the latter, also coinciding with the 200-day moving average. This moving average, which functions as dynamic resistance, needs to give way for 99.00 and 99.42 to come into focus.