USD Index Plummets to 2-Month Low, Risk Appetite Soars

  • USD Index (DXY) drops below key support at 102.00, hitting 2-month lows.
  • Risk appetite among investors dominates, leading to the decline.
  • Implications for South African markets include potential benefits for exporters and challenges for importers due to currency fluctuations.
USD Index

On turnaround Tuesday, the USD Index (DXY) continued its downward trajectory, shedding further ground and breaking below the crucial support level of 102.00. This decline has led to the printing of new 2-month lows. The drop in the USD Index can be attributed to the prevailing risk appetite among investors, favoring risk-associated assets over the safe-haven US dollar. The implications of this decline on the South African market are significant, as investors closely monitor global currency trends.

Factors Affecting the USD Index

The ongoing sell-off of the US dollar can be attributed to several key factors. Firstly, investors’ appetite for riskier assets has increased, leading to a shift away from the safe-haven status of the US dollar. Secondly, US yields have been correcting lower from recent peaks, contributing to the downward pressure on the greenback. Lastly, market participants are eagerly awaiting the release of crucial US inflation figures, which could further influence the trajectory of the USD Index.

Expectations for Fed’s Monetary Policy

The Federal Reserve’s upcoming July 26 meeting is expected to result in a 25 basis point rate hike. This anticipation is driven by positive US fundamentals, such as robust employment and rising prices. Federal Reserve Chairman Jerome Powell’s remarks at the June FOMC event reinforced these expectations, as he referred to the July meeting as “live” and indicated that most Committee members are prepared to resume tightening measures as early as next month. These factors contribute to the pessimism surrounding the USD Index.

Implications for South African Markets:

The performance of the USD Index has implications for the South African market, as investors closely monitor global currency trends. A weaker US dollar can have both positive and negative effects. On one hand, it may benefit South African exporters, as a weaker dollar can improve their competitiveness in international markets. On the other hand, importers may face challenges due to potential currency fluctuations. South African investors and businesses should carefully evaluate the impact of the USD Index’s decline on their portfolios and adjust their strategies accordingly.

Key Events and Levels to Watch

In the US, upcoming events include the release of MBA Mortgage Applications, Inflation Rate, and the Fed’s Beige Book. These releases will provide further insights into the state of the US economy and can impact the trajectory of the USD Index.

Regarding levels to watch, immediate support for the USD Index lies at 101.67, which marks the monthly low on July 11. Further support can be found at 100.78, representing the 2023 low on April 14. A breakthrough below these levels could potentially test the key support at 100.00. On the upside, a breakout above 103.54 would open the door for potential gains towards 104.56 and then 104.69.


The USD Index’s decline to 2-month lows is driven by investors’ risk appetite and expectations regarding the Federal Reserve’s monetary policy. South African investors should closely monitor these developments as they can significantly impact the performance of the country’s currency and have implications for various sectors of the economy. By staying informed and assessing key levels and upcoming events, investors can make informed decisions to navigate the potential effects of the USD Index’s movements on the South African market.

Visited 1 times, 1 visit(s) today

Stay ahead in the financial world – Sign Up to Rateweb’s essential newsletter for free. Get the latest insights on business trends, tech innovations, and market movements, directly to your inbox. Join our community of savvy readers and never miss an update that could impact your financial decisions.

Do you have a news tip for Rateweb reporters? Please email us at


Start trading with a free $30 bonus

Trade stocks, forex, commodities, metals and CFDs on stock indices with an internationally licensed and regulated broker. For all clients who open their first real account, XM offers a $30 trading bonus without any initial deposit needed. Learn more about how you can trade over 1000 instruments on the XM MT4 and MT5 platforms from your PC and Mac, or from a variety of mobile devices.


Personal Financial Tools

Below is a list of tools built to assist South Africans to make the best financial decisions:



South Africa’s primary source of financial tools and information

Contact Us


Rateweb strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution’s Terms and Conditions.

Rateweb is not a financial service provider and should in no way be seen as one. In compiling the articles for our website due caution was exercised in an attempt to gather information from reliable and accurate sources. The articles are of a general nature and do not purport to offer specialised and or personalised financial or investment advice. Neither the author, nor the publisher, will accept any responsibility for losses, omissions, errors, fortunes or misfortunes that may be suffered by any person that acts or refrains from acting as a result of these articles.