DXY: US dollar index forecast ahead of FOMC minutes and GDP data

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Nov 24, 2021
  • The US dollar index has been in a strong bullish trend.
  • It will react to the latest US GDP data scheduled for Thursday.
  • The Fed will also publish the latest minutes.

The US dollar index (DXY) bullish trend accelerated ahead of the latest US GDP and inflation numbers. It is trading at $96.55, which was the highest level since July 2020. The DXY has jumped by more than 8% from its lowest level this year.

US GDP data 

The US will publish several important economic numbers on Wednesday. Some of these numbers will come a day earlier because of the upcoming long Thanksgiving weekend.

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The statistics agency will publish the latest US GDP data. Based on the first estimate, economists expect that the American economy expanded by 2.1% in the third quarter. This will be a sharp decline from the second quarter’s growth of more than 5%. Q2 was helped by the large stimulus bill passed early this year.

Still, the GDP data impact on the dollar index will be relatively limited. This is simply because the data has already been priced in by the market.

The agency will also publish the latest personal consumption expenditure (PCE) data. These numbers will likely show that the country’s inflation remained at the highest level in more than 30 years in October. The PCE is the gauge that the Fed watches closely on inflation.

The DXY index will also react to the latest durable goods order numbers. Economists expect that the country’s durable goods orders did well in October. Precisely, the headline durable goods orders is expected to rise to 0.2% while the core durable goods orders rose to 0.5%.

The next important mover for the US dollar index will be the initial jobless claims numbers. With the country reopening, analysts expect that the number of initial claims declined to 260k last week. This is in the same range it has been in the past few weeks. 

The US will also publish the latest new home sales data while the Federal Reserve will publish the latest minutes.

US dollar index forecast

Dollar index

Turning to the daily chart, we see that the DXY index has been in an uptrend lately. The pair has managed to move above the 25-day and 50-day moving averages. It has also jumped above the Ichimoku cloud while the MACD has continued rising. Therefore, at this point, the path of the least resistance for the index is to the upside, with the next key level to watch being at $97.

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