Dollar Index (DXY) Reacting Favorably to Fed Audio system

U.S. DOLLAR ANALYSIS & TALKING POINTS

• Fed audio system add to hawkish rhetoric.
• Will there be extra comply with via from the bull flag?

USD FUNDAMENTAL BACKDROP

The Dollar Index (DXY) has been rallying on the again of Fed officers these days which is barely shocking as markets appeared unphased post-Non-Farm Payroll (NFP), CPI and retail gross sales knowledge. In addition, Fed steerage has additionally been largely dismissed of latest however because the push for sustaining a good financial coverage setting within the US grows, so does its affect on market members. Revisions to the Fed cycle has been fairly important and already markets have upped their predictions to 5.3% (peak price) for 2023 – see desk beneath.

FEDERAL RESERVE INTEREST RATE PROBABILITIES

Source: Refinitiv

Today, the Fed’s Mester talked about “ January’s CPI data showed that there’s still more to do on cooling inflation” once more compounding the messages despatched out by yesterday’s audio system giving the greenback additional assist. One extra Fed speaker is scheduled for at present (Barkin) however the dollar is prone to shut within the inexperienced going into subsequent week.

ECONOMIC CALENDAR

Source: DailyFX financial calendar

TECHNICAL ANALYSIS

U.S. DOLLAR INDEX DAILY CHART

Chart ready by Warren Venketas, IG

Daily DXY value motion has confirmed the transfer above key resistance within the type of the medium-term trendline (black), the 50-day SMA (yellow) and bull flag resistance (inexperienced). This key space of confluence now stands as assist with the 104.00 psychological deal with being surpassed for the primary time since early January 2023. Looking forward, contemplating the Relative Strength Index (RSI) isn’t in overbought territory simply but, there may be scope for additional upside in direction of the 105.00 degree.

Resistance ranges:

• 105.00

Support ranges:

• 104.00
• 103.42/50-day SMA

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