BBDXY Hits Fresh '24 Highs On Retail Sales, Limited Follow Through

The broader USD initially rallies on the back of the comfortably firmer-than-expected round of U.S. retail sales data, registering a fresh YtD best in the process.

• The measure has breached its 50- & 200-DMAs in the last couple of sessions and an extension higher would target the 50% retracement of the Oct-Dec ’23 sell off (1,243.97). That retracement marker provides initial resistance in front of a string of December intraday highs.
• A move away from post-data session highs in Tsy yields limits follow through, seeing the BBDXY back from best levels.
• A reminder that the USD benefitted from Fed Governor Waller’s remarks on Tuesday (hawkish vs. market pricing) and broader risk aversion (punctuated by a heavy sell off in Chinese equities). This data adds another leg of support to the greenback, with positioning also a likely, albeit unsubstantial, supportive factor.