US Dollar Index Faces Resistance Near 107.00 Amid Fed’s Inflation and Rate Cut Hints
- US Dollar Index retreats to 106.50 and continues hitting a barrier near 107.00.
- Dollar weakens on Fed’s Williams hinting at inflation cooling and rate reduction.
- Fed officials remain cautious amid persistent inflation concerns and uncertainty about future rate decisions.
- Mid-tier data from the US came in mixed on Thursday.
In Thursday’s trading session, the US Dollar Index (DXY) showed signs of stalling after Federal Reserve official Williams suggested a potential decrease in inflation and subsequent interest rate cuts. Market data revealed that Jobless Claims figures fell short of expectations, while concerns arose over Manufacturing data, leading to a flat DXY around 106.50 and a possible search for support levels for a rebound.
The DXY’s bullish trend remains intact, supported by robust economic indicators and a relatively less dovish stance from the Fed. The current upward momentum is fueled by hawkish sentiments, risk aversion, and geopolitical tensions, with limited expectations for aggressive Fed easing in the near term.
Daily Market Analysis: US Dollar Softens on Fed News and Mixed Data
- Fed’s Williams hints at potential inflation moderation and rate cuts, leading to DXY’s stabilization.
- Jobless Claims data disappoint, while Manufacturing data raises investor worries.
- Initial Jobless Claims for the week ending November 15 decrease to 213,000, below expectations.
- Continuing claims unexpectedly rise to 1.908 million, up by 36,000 from the previous week.
- Philadelphia Fed Manufacturing Survey drops to -5.5 in November, slipping into negative territory.
- Markets now assign a 55.5% probability of a 25 bps rate cut by the Fed in December, down from 70% last week.
- The US 10-year benchmark yield falls to 4.39%, moving away from its recent high of 4.50%.
DXY Technical Analysis: Resistance at 107.00 as Bulls Face Potential Consolidation
Technical indicators like RSI and MACD remain positive but show signs of consolidation due to near overbought conditions. The index stays above its key SMAs, providing support for bullish sentiments. Short-term focus is on maintaining the 106.00 level for the bulls.
US Dollar FAQs: Understanding the Impact of Monetary Policy on USD
- The US Dollar (USD) is the official currency of the United States and a dominant global currency.
- Monetary policy, shaped by the Federal Reserve (Fed), is a key driver of USD value.
- Fed adjusts interest rates to control inflation and promote full employment, impacting USD strength.
- Quantitative easing (QE) and tightening (QT) are extreme measures affecting USD value.