The US Dollar (USD), as measured by the DXY Index, rebounded from Monday’s lows as markets digested the initial results of the French legislative elections. While Marine Le Pen’s far-right party performed well, the overall outcome suggests a potential stalemate, with no single party securing a majority.
Market Drivers: French Elections, Economic Data, and Central Bank Commentary
- French Election Uncertainty: The inconclusive first round of voting in France has created uncertainty, which could weigh on the Euro and potentially benefit the US Dollar in the near term.
- US Economic Data: Traders are closely watching the upcoming release of the June ISM Manufacturing PMI, which could provide further insights into the health of the US economy.
- ECB Symposium in Sintra: The annual ECB symposium in Portugal, where central bank officials will deliver speeches and participate in interviews, could offer clues about future monetary policy decisions, potentially impacting the USD.
Technical Analysis: DXY Bounces Back, Faces Key Resistance Levels
The DXY Index has rebounded from its recent lows, but it faces several key resistance levels on its path to recovery. The 105.89 level, which the index failed to hold last week, is the first hurdle to overcome. A break above this level could open the door for a rally towards the descending trendline at 106.26 and the April high of 106.52.
On the downside, support can be found at 105.53, followed by the 55-day, 100-day, and 200-day SMAs clustered around 105.00. A breach below these levels could trigger further declines.
Key Takeaways:
- The US Dollar is regaining strength as markets assess the implications of the French election results.
- Upcoming US economic data and central bank commentary will be key drivers of the DXY’s trajectory in the coming days.
- The DXY faces crucial resistance levels on its path to recovery, and a break above these levels could signal further upside potential.