Despite a stronger-than-expected U.S. Producer Price Index (PPI), the dollar remains subdued due to the Fed‘s balanced assessment of inflation and recession risks
The dollar struggles below the $106 mark as the Federal Reserve adopts a dovish stance, signalling a potential end to its rate-hiking cycle. Despite a stronger-than-expected U.S. Producer Price Index (PPI), the dollar remains subdued due to the Fed’s balanced assessment of inflation and recession risks, revealed in the September Federal Open Market Committee (FOMC) meeting minutes. Gold prices surged on the back of the dollar’s softened position and ongoing geopolitical tensions in the Middle East. In contrast, oil markets experienced a sharp 3% decline following a substantial increase in crude stockpiles reported by the American Petroleum Institute (API).
On top of that, Saudi Arabia’s commitment to stabilising oil prices amid Middle East conflicts tempers the market’s apprehension.
Dollar index
The US Dollar remained steady as it tested robust support levels, with the US Producer Prices Index revealing a slight drop in underlying inflation, aligning with market expectations. However, the retreat in US Treasury yields, fueled by a chorus of dovish tones from Federal Reserve members, has tempered the need for imminent rate hikes.
Investor attention is now keenly focused on the forthcoming US Consumer Price Index (CPI) data for potential market movements.
The Dollar Index is trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 36, suggesting the index might enter oversold territory.
Resistance level: 106.35, 106.90.
Support level: 105.65, 105.20.
