The US dollar gained strength following economic data that slightly exceeded inflation expectations, while jobless claims saw a modest increase. Traders are closely monitoring evolving Federal Reserve policies, as comments from Fed Governor Christopher Waller later today could provide further direction. With geopolitical risks and inflationary pressures in focus, the dollar remains a key safe-haven asset, prompting interest in its short-term technical outlook.
The dollar has shown strength due to tempered expectations for significant rate cuts, following recent US economic data. Inflation was slightly higher than anticipated, although jobless claims also rose to 258,000.
Later today, comments from Fed Governor Christopher Waller could provide further clarity, as he has previously signalled support for lowering rates to counter cooling inflation.
The US Dollar Index (USDX) closed at 102.805, marking a modest gain of 0.15% for the session.
The index fluctuated within a range of 102.685 to 102.870, indicating steady but limited upward momentum.
The MACD (12, 26, 9) has moved into positive territory, with the MACD line rising above the signal line and the histogram bars expanding, pointing to increasing bullish sentiment.
The price also sits above key moving averages (5, 10, and 30 periods), confirming a bullish trend.
Key levels to monitor include the session high of 102.945, which serves as near-term resistance. A breakout above this level could trigger further gains.
On the downside, 102.435 is a critical support level. A drop below this point may signal a potential decline, with the next target around 102.200.
Market sentiment towards the US dollar has strengthened, driven by ongoing assessment of inflation data and evolving Federal Reserve policy expectations.
Recent inflation reports have slightly exceeded forecasts, leading traders to closely monitor the Fed’s next moves. The Federal Reserve’s dovish shift, with policymakers hinting at a pause in the rate-hiking cycle, has tempered some of the dollar’s upward momentum.
This pause signals that the Fed may be more cautious about further tightening monetary policy, particularly as inflationary pressures ease.
Despite this, geopolitical factors are playing a critical role in maintaining the dollar’s appeal. Ongoing conflicts and tensions—ranging from the war in Ukraine to heightened concerns in the Middle East and strained US-China relations—have contributed to global economic uncertainty.
As a result, demand for riskier assets has decreased, pushing investors towards the US dollar as a safe-haven currency.
Additionally, declining oil prices, driven by the slowdown in China’s economy, along with the impact of sanctions on global trade, are contributing to market volatility, reinforcing the dollar’s position as a stable store of value.
Consequently, even with a more dovish Federal Reserve, the US dollar is likely to continue benefiting from geopolitical risks and shifts in global risk sentiment.
Click here to open account and start trading.
Official partners:
