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June USD Index Fades Beneath 97.500

The dreaded “r” word is the term of the day for the mainstream financial media, with talk of a U.S. recession gaining steam. The result has been major pressure on the Greenback, as industry experts are now projecting two FED rate cuts by the end of 2019. This would be a 180-degree policy shift from last September, when the FED’s official position was “restrictive.”

In response to the growing expectations of pending rate cuts, JP Morgan issued a bearish intermediate-term projection on U.S. Treasuries earlier today. Citing concerns over U.S. Q4 2019 GDP falling to 1.5%, the investment bank now expects the 10-Year T-note to hit 1.75% by year’s end. This sentiment is being echoed by banking monolith Morgan Stanley, whom publicly commented that the escalation of tariffs is likely to usher in a recession by year’s end.

June USD Index Futures Fade To Open June

June USD Index futures have extended last week’s losses, falling beneath the 97.500 level. Amid the buzz over a pending series of FED rate cuts, the Greenback has had a tough open to the month.

June USD Index Futures (DX), Daily Chart
June USD Index Futures (DX), Daily Chart

Here are the levels to watch in this market for the remainder of the session:

  • Resistance(1): Bollinger MP, 97.560
  • Support(1): Daily SMA, 97.430

Overview: Fundamentals are ruling the day for the USD. Over the weekend, strong verbiage out of China reinforced the notion that there is no end in sight for the ongoing trade war. Earlier today, a falling ISM Manufacturing Index gave the recession crowd more food for thought.

As of this writing (11:30 AM EST), negative sentiment toward the Greenback has June USD Index futures putting in a formidable retracement. Should it continue and we see settlement beneath the Daily SMA, then a test of 97.000 will become probable by Friday.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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