US Dollar rising as markets gear up for Retail Sales

• US Dollar proves strong as markets are pricing in a Trump victory in November.
• Fed easing expectations: 150 bps of total easing seen over the next 12 months.
• Retail Sales on Thursday will be closely watched.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six others, continues rising as financial markets are doubling down on a Donald Trump win in the US presidential election. This is mainly due to Trumps's plans on several sectors of the economy of deregulating according to IG Bank's analyst. The DXY has broken above key resistance and is on its way to 104.00.

With the US economy showing mixed signs, Federal Reserve (Fed) officials remain cautious, signaling that the pace of the easing will rely on incoming data. In the meantime, political jitters seem to be benefiting the USD ahead of November's election.

Daily digest market movers: US Dollar adds more ground on quiet Wednesday

• The US economic calendar showed no highlights on Wednesday as markets wait for Thursday's Retail Sales figures.
• In case those figures come in strong, it could give the USD another boost. As for now, markets are expecting a slight monthly expansion.
• Fed officials Daly and Bostic remain cautious, suggesting only one or two rate cuts this year.
• Market expectations for Fed easing have slightly decreased, with two cuts by year-end no longer fully priced in but still remaining high above 80%.

DXY technical outlook: DXY pierces through key levels, correction looms

Technical analysis for the DXY index indicates continued momentum among indicators with some flashing overbought signals. The index has broken above the crucial 100-day Simple Moving Average (SMA), with the next major resistance at the 200-day SMA at 103.80. While buyers are pushing for an optimistic outlook, a potential correction may occur before the next upswing.

Supports are found at 103.00, 102.50 and 103.00, while resistances lie at 103.30, 103.50 and 104.00.