USD Index weekly preview
Last week ended with a sharp gain in the U.S. PMI data, and the Us dollar was strongly supported.
Last Friday, the U.S. Markit`s initial Manufacturing and Service PMI both hit record highs. Manufacturing PMI printed 61.5 (expected and previous numbers were 60.2 and 60.5 respectively), while the Service PMI recorded 70.1 (expected and last value, were 64.5 and 64.7 respectively). Markit Composite PMI also rose to 68.1 from the previous value of 63.5. Overall, these data reflect the continued substantial expansion of the U.S. economy caused by vaccine distribution and two rounds of government Stimulus packages so far this year.
On the other hand, the Biden administration once again cut its infrastructure plan to 1.7 trillion U.S. dollars, hoping to finally pass the Senate and House of Representatives before July 4. According to foreign media reports, the projects that have been cut from the general plan are broadband to $65 billion, from $100 billion same as the Republican proposal, road and bridge infrastructure to $120 billion, from 159 billion. In addition, the government may also cancel funding projects for research and development, small businesses, and supply chain improvements.
In any case, the concessions made by the White House do not seem to meet the Republican`s demands. Especially the increased corporate tax to 28%. Republicans even clearly pointed out that this tax increase plan is a "red line" for them. It is expected that Republicans to vote against that and prevent the bill from being passed. Not only that, there are still significant differences between the two parties on the scale, scope, and funding methods of the agreement, and the spending bill may be difficult to pass on July 4.
U.S. Dollar Index technical overview
Published data last week, besides our expectations of coming data in the week ahead, expected to support the USD index. Technically, the H1 chart index starts its slow uptrend, while in the H4 chart, side movement with uptrend tendency is what we can see in the chart. RSI in the H1 chart sits at 52, and in the H4 chart sits at 48. in both charts, prices either move above the OBV trend line or trying to get above that and price raising, all signaling of the possible uptrend. 89.90 is the pivot point, and above first resistance at 90.20 will confirm the uptrend. Under the pivot point, support levels respectively are at 89.70 and then 89.40.
