Dovish Fed expectations prevent the US Dollar index from making a decisive move above its 200-DMA [Video]

It was yet another day, and another record high for the US major stock indices. The S&P500 traded to 4930 for the first time, driven higher by falling US yields after the US Treasury surprisingly cut its quarterly borrowing estimate, on hope that five of 7 Magnificent stocks will surprise positively when they reveal their results this week, and on hope that we might hear something relatively dovish from the Federal Reserve (Fed) meeting this week.

Microsoft, AMD and Google are due to report earnings after the bell, and the Fed will announce its latest policy decision on Wednesday.

The dovish Fed expectations prevent the US dollar index from making a decisive move above its 200-DMA. Investors expect the Fed to cut the rates from May and the dollar to lose value this year. But nothing is less certain, the rising oil prices look threatening to Fed’s rate cut plans.

Elsewhere, the EURUSD has been benefiting from a limited courage to sell the US dollar, but the pair is extending losses below its 200-DMA on expectation that the European Central Bank (ECB) can’t keep its interest rates at the current levels with the sputtering economies. This morning, the Eurozone countries will start revealing their inflation and growth updates. The lower the growth, and the slower the inflation, the sooner the ECB will cut rates. But if inflation surprises to the upside, we could see a part of the ECB dovishness vanish, even with gloomy growth numbers.