US Dollar unable to recover losses with Japan intervening

• 
  The
  US
  Dollar
  retreats
  firmly
  after
  soft
  CPI
  release. 
• 
  The
  Fed
  should
  no
  longer
  be
  concerned
  on
  the
  disinflationary
  trajectory. 
• 
  The
  US
  Dollar
  index
  falls
  further
  and
  heads
  to
  104.00.

The
US
Dollar
(USD)
is
easing
firmly
on
Thursday
after
the
US

Consumer
Price
Index
(CPI)
for
June
revealed
a
substantial
decline
in
inflation.
Special
remarks
for
the
retail
sales
which
shrank
even
by
0.1%,
meaning
that
US
consumer
is
no
longer
willing
to
pay
current
prices
for
goods
and
is
rather
awaiting
for
lower
prices
before
making
their
purchases.
Add
in
there
a
softer
print
for
housing
and
rent,
and
it
looks
like
the
Fed
measures
put
in
place
are
starting
to
pay
off. 

On
the
economic
front,
most
important
data
for
this
Thursday
is
out
of
the
way,
and
focus
will
now
shift
towards
Friday
on
the
Producer
Price
Index
(PPI)
numbers
for
June.
Meanwhile
markets
will
want
to
hear
from
Fed
officials
that
these
numbers
are
what
they
are
looking
for,
and
should
trigger
a
more
dovish
response
from
the

Fed.
With
nearly
less
than
two
months
left,
the
initial
rate
cut
for
the
US
looks
to
be
locked
in
for
September.  

Daily
digest
market
movers:
Japan
used
momentum

• The
  Japanese
  Ministry
  of
  Trade
  and
  Finance
  refused
  to
  give
  comments,
  though
  USD/JPY
  is
  down
  nearly
  2%,
  to
  158.50,
  coming
  from
  161.69
  earlier
  this
  week.
  Television
  network
  Asahi
  though
  confirms
  that
  interventions
  took
  place
  just
  briefly
  after
  the
  US
  CPI
  numbers
  came
  out. 
• Let
  us
  walk
  you
  through
  the
  main
  numbers
  that
  came
  in
  this
  Thursday:
  • US
    CPI
    for
    June:
    • Monthly
      headline
      CPI
      fell
      into
      contraction
      from
      +0.1%
      to
      -0.1%
      for
      June. 
    • Monthly
      core
      CPI
      declined
      from
      0.2%
      to
      0.1%.
    • Annual
      headline
      CPI
      fell
      from
      3.3%
      to
      3.0%.
    • Annual
      core
      CPI
      went
      from
      3.4%
      to
      3.3%.
  • Weekly
    Jobless
    Claims
    for
    the
    week
    of
    July
    5:
    • Initial
      Claims
      came
      in
      a
      touch
      lower,
      from
      239.000
      to
      222.000.
    • Continuing
      Claims
      went
      from
      1.856
      million
      to
      1.852
      million. 
• At
  15:30
  GMT,
  President
  of
  Federal
  Reserve
  Bank
  of
  Atlanta
  Raphael
  Bostic
  participates
  in
  a
  moderated
  conversation
  at
  the
  NCUA’s
  Diversity,
  Equity,
  and
  Inclusion
  Summit
  in
  Minneapolis,
  United
  States.
• Equity
  markets
  are
  getting
  dispersed
  with
  the
  Nasdaq
  dragging
  the
  other
  two
  major
  US
  indices
  in
  the
  red,
  while
  European
  equities
  get
  to
  keep
  their
  gains. 
• The
  CME
  Fedwatch
  Tool
  is
  broadly
  backing
  a
  rate
  cut
  in
  September
  despite
  recent
  comments
  from
  Fed
  officials.
  The
  odds
  now
  stand
  at
  68.1%
  for
  a
  25-basis-point
  cut.
  A
  rate
  pause
  stands
  at
  a
  28.6%
  chance,
  while
  a
  50-basis-point
  rate
  cut
  has
  a
  slim
  3.3%
  possibility. 
• The
  US
  10-year
  benchmark
  rate
  trades
  at
  4.17%
  and
  prints
  a
  fresh
  low
  for
  this
  week.

US
Dollar
Index
Technical
Analysis:
Where
DXY
will
close
this
week
will
be
key

The
US
Dollar
Index
(DXY)
faces
a
key
pivotal
moment
with
the
US
Consumer
Price
Index
release
for
June.
This
is
the
make-or-break
moment
for
September
rate
cut
prospects,
with
any
uptick
snapping
the
disinflationary
trajectory
that
would
mean
that
September
meeting
is
off
the
table.
So,
expect
markets
to
give
a
more
significant
probability
of
a
further
easing
of
the
DXY
than
a
stronger
US
Dollar. 

On
the
upside,
the
55-day
Simple
Moving
Average
(SMA)
at
105.14
remains
the
first
resistance.
Should
that
level
be
reclaimed
again,
105.53
and
105.89
are
the
following
nearby
pivotal
levels.
The
red
descending
trend
line
in
the
chart
below
at
around
106.23
and
April’s
peak
at
106.52
could
come
into
play
should
the
Greenback
rally
substantially. 

On
the
downside,
the
risk
of
a
nosedive
move
is
increasing,
with
only
the
double
support
at
104.81,
which
is
the
confluence
of
the
100-day
SMA
and
the
green
ascending
trend
line
from
December
2023,
still
in
place.
Should
that
double
layer
give
way,
the
200-day
SMA
at
104.41
is
the
gatekeeper
that
should
catch
the
DXY
and
avoid
further
declines.
Further
down,
the
correction
could
head
to
104.00
as
an
initial
stage. 

US
Dollar
Index:
Daily
Chart