US Dollar holds gains as Fed speakers stand out in soft start of the week

LONDON (October 14) The US Dollar (USD) edges up slightly at the start of the week with several parts of the US markets closed for Columbus Day. Despite the bank holiday, three Federal Reserve (Fed) members are due to speak. Meanwhile, the additional stimulus package from the Chinese government did not trigger any big moves in markets. 

The economic calendar is thus empty due to the Columbus Day bank holiday in the US. About Fedspeak, traders will need to watch out for comments from Federal Reserve Governor Christopher Waller, who has a track record of leaving market-moving comments.

Daily digest market movers: A very light calendar ahead

• Due to Columbus Day, the bond market is closed in the US. Equity Futures markets are open and trading.
• At 13:00 GMT, Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a panel discussion about fiscal deficits, monetary policy and inflation at the Central Bank of Argentina's Money and Banking Conference in Buenos Aires. Later at 21:00 GMT, Kashkari will speak again about the current state of the US economy at the Department of Economics of Torcuato di Tella University.
• Around 19:00 GMT, Federal Reserve Governor Christopher Waller speaks about the US economic outlook at a conference titled "A 50-Year Retrospective on the Shadow Open Market Committee and Its Role in Monetary Policy" in Stanford, California.
• Equities are looking for direction this Monday with no real outliers to report. Europe is trading marginally in the green, while US futures are flat. 
• The CME Fed rate policy expectation for the meeting on November 7 stands at 88.2% for a 25 basis point rate cut, while 11.8% is pricing in no rate cut. Chances for a 50 bps rate cut have been fully priced out. 
• The US 10-year benchmark rate is not trading this Monday and closed on Friday at 4.10%.

US Dollar Index Technical Analysis: Pivotal moment this week

The US Dollar Index (DXY) is orbiting around 103.00 and looking for a chance to go higher. The question on the table is whether, with a very light US calendar this week, there will be any catalyst big enough to elevate the DXY to the next level. If the Fed speakers can not do it on Monday, it looks questionable if the US Dollar Index will be able to advance any further for now. 

The psychological 103.00 is the first level to tackle on the upside. Further up, the chart identifies 103.18 as the very final resistance level for this week. Once above there, a very choppy area emerges, with the 100-day Simple Moving Average (SMA) at 103.24, the 200-day SMA at 103.77, and the pivotal 103.99-104.00 levels in play. 

On the downside, the 55-day SMA at 101.88 is the first line of defence, backed by the 102.00 round level and the pivotal 101.90 as support to catch any bearish pressure and trigger a bounce. If that level does not work out, 100.62 also acts as support. Further down, a test of the year-to-date low of 100.16 should take place before more downside. Finally, and that means giving up the big 100.00 level, the July 14, 2023, low at 99.58 comes into play.

FXStreet