Original title: Powell will release another dovish signal, and PPI that exceeds expectations will not save the US dollar
Wednesday (7/14)
The dollar index fell sharply. Although the US PPI in June greatly exceeded expectations, Powell's moderate remarks and declining US bond yields weakened the dollar.
According to data released by the US Bureau of Labor Statistics on Wednesday, the US Final Demand Producer Price Index (PPI) rose 7.3% year on year in June, up from 6.6% in May. This figure far exceeded market expectations of 6.8%. PPI rose from 0.8% month-on-month to 1%.
Further details from the report showed that core PPI rose to 5.6% from 4.8% in May, exceeding analysts' expectations of 5.1%.
Meanwhile, Chairman Jerome? Powell will deliver a speech at the congressional hearing, saying that the Fed's monetary policy will provide strong support until the economic recovery is complete.
Powell said that the job market is still a long way from the progress needed to begin reducing the scale of debt purchases. In the next few months, inflation may continue to be high before it falls back. People's expectations are generally in line with the Fed's target.
Powell said that the balance sheets of households and businesses are quite strong, and that core financial institutions are flexible.
Powell believes strong employment growth is expected to continue in the coming months as the health crisis continues to ease.
Although PPI was stronger than expected, the dollar index fell due to the moderate tone of Powell's speech to be delivered at the congressional hearing.
The US dollar has now recovered more than half of yesterday's gains, but the downside, supported by the 5-day EMA and 10-day EMA, may have bottomed out and rebounded.
If the US dollar index closes above the 76.4% retracement level of 92.51, the US dollar may continue its previous gains, but if the dollar falls below the 5-day EMA of 92.39, then the rally may be suspended, and the market continues to fall into a volatile pattern.
The upper resistance levels can focus on 92.84, 93.00, and 93.44, while the lower support levels focus on 92.19, 91.94, and 91.60.
(US dollar index daily chart) At 22:00 Beijing time, the US dollar index reported 92.36.