On the first day of September trading, the U.S. Dollar Index ® (USDX) closed slightly lower at 101.62, down 0.03%. The following day, despite disappointing ISM Manufacturing PMI data indicating ongoing sector contraction, the USDX rebounded, lifted by a slight improvement compared to the previous month. The USDX rallied to test the midpoint of the daily Bollinger Bands before pulling back to close at 101.77 with a gain of 0.15%. Bearish sentiment emerged over the next two days, exacerbated by weaker job market data released on September 5th. ADP Employment Change for August came in at 99,000 (revised to 103,000 at October’s announcement), falling short of the 145,000 forecast and below July's downwardly revised 111,000. Although ISM Services PMI released the same day showed slight improvement, moving from 51.4 to 51.5 in August and beating market expectations the USDX closed down 0.16% at 101.07. The week ended on a more positive note with the release of Nonfarm Payrolls data. Although the 142,000 new jobs created in August fell below market expectations of 160,000, it marked a significant improvement over July's downwardly revised 89,000. Average Hourly Earnings edged higher both month-on-month and year-on-year, signaling a reversal from the previous months' easing in wage pressures. Despite the job numbers suggesting some cooling in the labor market, the data supported the USDX. After reaching a low of 100.53, the bulls returned and the U.S. Dollar Index ® closed at 101.14 with a gain of 0.13%. The U.S. Dollar Index ® closed the week down 0.50%.

On September 9th the U.S. Dollar Index ® rallied to close the day with a 0.37% gain at 101.52 marking the first close above the midpoint of the daily Bollinger Bands since August 1st. The following day the USDX gapped up at the open, although it pulled back slightly to close at 101.60 with a loss of 0.03%. September 11th the U.S. Dollar Index ® experienced some volatility after the release of inflation data recovering from an earlier low of 101.24 before rebounding to retest a resistance area created earlier in the month. While Annual Core Inflation remained steady, broader price pressures eased significantly, with CPI data surprising markets by falling lower than expected. The U.S. Dollar Index ® closed the day with a modest gain of 0.03% at 101.66. September 12th Producer Price Index ex Food & Energy for the 12 months ending August was released. While there was a slight uptick from the prior release it missed market expectations, which led the USDX to close down 0.40% at 101.35, breaking below the midpoint of the daily Bollinger Bands. The final trading day of the week saw the USDX gap down at the open. The impact of the European Central Bank (ECB) reducing rates on September 12th and the increased expectations that the Federal Reserve would reduce rates created bearish market sentiment on September 13th. Despite the USDX finding support at the lower boundary of the daily Bollinger Bands and pulling back the U.S. Dollar Index ® closed down 0.05% at 100.79. Overall, the USDX ended the week with a loss of 0.35%.

The following week the U.S. Dollar Index ® traded lower overall, with some respite on September 17th after Retail Sales exceeded market expectations which led to a gain of 0.19%. The Federal Reserve's interest rate announcement on September 18th surprised markets with a 50 basis point cut, the first reduction since March 2020. This decision was more aggressive than the widely anticipated 25 basis point cut, signaling a significant shift in monetary policy. The federal funds rate is now set in a range between 4.75% and 5%, down from the previous range of 5.25% to 5.5%. The USDX dropped sharply following the announcement, reflecting the market's surprise at the more dovish stance. The Fed also indicated the possibility of further rate cuts by the end of the year. The U.S. Dollar Index ® closed at 100.28 with a loss of 0.31%. The most volatile day of the week was September 19th as global markets digested the Feds move. The USDX reached a high of 101.18, breaching the midpoint of the Bollinger Bands and falling shy of a resistance area at 101.24 - 101.81 when bearish sentiment drove the market lower. The USDX closed at 100.32 with a loss of 0.39%. On the final trading day of the week the USDX closed with a modest gain of 0.03% at 100.42. The U.S. Dollar Index ® closed the week with a loss of 0.35%.

The U.S. Dollar Index ® traded sideways the following week finding support near the lower boundary of the daily Bollinger Bands amid mixed economic data. On September 23rd the preliminary S&P Global Manufacturing PMI indicated further contraction, falling to 47.0 from 47.9 in August, missing market forecasts. In contrast, S&P Global Services PMI surprised the markets at 55.4, while this exceeded forecasts it fell short of the prior release of 55.7. The USDX closed with a modest gain of 0.10% at 100.56. However, bearish sentiment returned the following day as demand for the U.S. Dollar weakened, resulting in a loss of 0.49% for the U.S. Dollar Index ®, the worst performing day of the month. On September 25th, the USDX rebounded strongly, marking its best daily performance of the month with a 0.65% gain, closing at 100.62 and recovering the previous day's losses. However, this momentum waned on September 26th and the market closed lower despite Gross Domestic Product (GDP) Annualized Q2 figures meeting expectations with a growth rate of 3.0%. The USDX closed the day with a loss of 0.41% at 100.25.

Bearish sentiment persisted on September 27th following mixed data released with Core Personal Consumption Expenditures - Price Index data meeting expectations year-on-year but falling short month-on-month. The USDX dropped to a low of 99.87 entering a daily support area at 99.87 - 99.22 where buyers emerged and drove the market higher, the USDX closed at 100.11 with a loss of 0.22%. The U.S. Dollar Index ® ended the week with a loss of 0.35%. The final trading day of the month saw renewed demand for the U.S. Dollar and the index closed the day with a gain of 0.30%.

The U.S. Dollar Index ® ended September with a loss of 1.11%, closing at 100.52. This marked the third consecutive lower monthly close and erased all gains made in 2024.

The U.S. Dollar Index ® remained in a downtrend on both the daily and weekly timeframes after trading below the daily and weekly SMA & EMA 20 and 30.

Source: ICE Connect

Source: ICE Connect

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