The US Dollar Index (DXY) is showing resilience, trading around the 105.35 mark with slight gains observed towards the end of the trading week. Despite maintaining its position, the Greenback appears stagnant as investors await catalysts to inform their positioning ahead of potential Federal Reserve (Fed) decisions.
Market sentiment remains cautious as the US economy faces instability, with expectations of slowing inflation providing some confidence for the Fed to consider rate cuts. However, Fed officials continue to adopt a hawkish stance, signaling a reluctance to ease policy prematurely.
In the daily market roundup:
San Francisco Fed President Mary Daly underscores the necessity for sustained restrictive measures to meet the Fed’s inflation objectives.
Atlanta Fed President Raphael Bostic hints at a possible economic slowdown, though the timing for potential rate adjustments remains uncertain.
The Fed maintains a cautious approach towards policy easing, with market forecasts leaning towards rate cuts commencing in September, in contrast to Chairman Powell’s recent dovish remarks.
The April Consumer Price Index (CPI) outcome is anticipated to provide crucial insights for market participants to refine their expectations moving forward.
Technical analysis of the DXY reveals a nuanced sentiment:
The Relative Strength Index (RSI) exhibits a positive slope but remains in negative territory, suggesting a potential shift in momentum despite prevailing selling pressure.
The Moving Average Convergence Divergence (MACD) displays flat red bars, indicating a lack of decisive momentum from either bulls or bears.
While the DXY has dipped below the 20-day Simple Moving Average (SMA) due to bearish influence, it remains above the 100-day and 200-day SMAs, indicating a mixed outlook with bears influencing short-term trends while bulls maintain control over medium to long-term trajectories.
