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US Dollar Pauses as Profit-Taking Sets In, Key Economic Data Awaited
The US Dollar Index (DXY) retreated on Monday after a recent rally, as investors took profits ahead of a pivotal week for economic data releases. While the US economy continues to show signs of strength, concerns about potential interest rate cuts and overbought conditions have tempered the greenback’s upward momentum.
Economic Outlook
Economists anticipate a solid 3.0% growth rate for the US economy in the third quarter, which could further support the dollar. However, the labor market is expected to show signs of weakness in October, with non-farm payrolls projected to be below 200,000. This potential slowdown could exert downward pressure on the currency.
Technical Analysis
The DXY briefly surpassed its 200-day Simple Moving Average (SMA) last week, but has since pulled back as it becomes overbought. Support levels are situated at 104.50, 104.30, and 104.00, while resistance levels are at 104.70, 104.90, and 105.00.
Market Implications
The upcoming week will be crucial for the US Dollar’s direction. Positive economic data, particularly strong employment figures, could bolster the currency. Conversely, weaker-than-expected data could trigger a decline. Traders will also be monitoring any further developments in the global economic landscape, geopolitical tensions, and central bank policies.
As the US Dollar consolidates, investors should closely watch key economic indicators and technical levels to gauge its future trajectory. A potential shift in market sentiment or a change in Federal Reserve policy could significantly impact the currency’s value.
