Will the dollar bounce back from its current decline?

9월 3일

<Fundamental>
The US July PCE was in line with market consensus. Headline PCE prices rose 0.2% from a month ago and 2.5% from a year ago, which aligns with market expectations. Core PCE, the Fed's price benchmark, rose only 0.16%, slower than the previous month's 0.18%. This is the lowest level this year and has catalyzed the market sentiment of the Fed’s rate cut.

It is worth noting that despite a 0.3% increase in personal income, surpassing the previous month's 0.2%, the savings rate remains alarmingly low. This is because personal consumption expenditures are growing at a faster rate than personal income.

The current savings rate has dropped to 2.9%, marking only the second instance in the past 16 years, since the global financial crisis, the savings rate has fallen to the 2% range.

This implies that consumption in the United States could decline quickly, serving as a cautionary signal that if employment falters, there may be insufficient buffers to sustain consumption.


<Techincal>
DXY sustained its uptrend after breaking out of the descending channel and advanced to 101.60. The price consolidates around the 101.50-101.70 range, waiting for an additional price trigger.

If the price breaches the resistance at 101.80 while holding above the EMA, the price may gain upward momentum toward 102.60. Conversely, if DXY fails to stay above both EMAs and retreats to the support at 100.50, the price could fall further to the 100.00 threshold.