US Dollar (DXY) Outlook – Fed Chair Powell, US Inflation Data And NFPs All Near

By Nick Cawley of DailyFX

Tuesday, November 29, 2022 10:25 AM EDT

US Federal Reserve chair Jerome Powell is set to give a speech at the Brookings Institute on Wednesday titled Economic Outlook, Inflation, and the Labor Market. The speech to the non-profit think tank comes just before the release of the latest US inflation and jobs data that will go a long way to decide the outcome of the mid-December FOMC policy decision. If Powell uses tomorrow’s platform to reaffirm that US interest rates will need to remain elevated for longer to counter stubbornly high inflation, the greenback will likely reverse its recent sell-off and push higher again. Recent hawkish speech from the Fed board member James Bullard – ‘we’ve got a ways to go to get restrictive on policy’ – may be the start of a central bank pushback against market expectations of looser monetary conditions in 2023.

The latest US consumer confidence reading is published at 15:00 GMT today, ahead of a cluster of high-importance data releases scheduled for the rest of the week.

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Short-dated US Treasury yields continue to edge lower and in the process are making a head and shoulders formation on the daily chart. If this pattern plays out then yields look set to move lower still, leaving the US dollar vulnerable to the renewed downside.

US 2-Year Treasury Yield Daily Chart

(Click on image to enlarge)

The US dollar’s sell-off on Monday was halted by the 200-day moving average and a zone of prior support. The daily bullish candlestick suggests that the DXY may push higher with 108 the likely first level of resistance.