US DOLLAR INDEX Forecast and News


US Dollar Index pulls back as Powell probe revives Fed independence concerns

US Dollar retreats from one-month highs as Fed independence concerns resurface. Fed Chair Jerome Powell's investigation and looming leadership change weigh on confidence in US monetary policy. Focus shifts to US CPI for fresh clues on the Fed’s monetary policy path.

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Latest US Dollar Index Analysis

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AUD/USD appears bid above 0.6700

AUD/USD appears bid above 0.6700

AUD/USD reverses three consecutive daily pullbacks, regaining some composure in response to the renewed selling pressure on the Greenback as investors assessed fresh threat to the Fed’s independence. Next on tap in Oz will be the Westpac Consumer Confidence gauge.

EUR/USD meets resistance around 1.1700

EUR/USD meets resistance around 1.1700

EUR/USD sets aside part of the recent sharp sell-off, gathering fresh steam on the back of the intense downward bias in the US Dollar. The Greenback’s marked pullback comes on the back of renewed concerns over the Fed’s independence, all ahead of Tuesday’s key US CPI data release.

Gold smashes $4,600 record as Powell charges ignite haven frenzy

Gold smashes $4,600 record as Powell charges ignite haven frenzy

Gold rallies to new record high past $4,600 on Monday due to safe-haven flows courtesy of the US Department of Justice, which presented charges against the Federal Reserve Chair Jerome Powell over the building’s renovations. At the time of writing, XAU/USD trades at $4606, up more than 2%.

Strategy buys $1.25 billion worth of Bitcoin, but sell-side pressure remains dominant

Strategy buys $1.25 billion worth of Bitcoin, but sell-side pressure remains dominant

Bitcoin treasury and financial intelligence company Strategy stepped up its accumulation of the top crypto last week after it purchased 13,627 BTC for $1.25 billion, its largest buy since last July.

The week ahead: Earnings season meets Donald Trump in a big week for markets

The week ahead: Earnings season meets Donald Trump in a big week for markets

Federal investigation of Powell and the Fed knocks risk sentiment. Concerns grow about Fed independence as gold hits a record. Are markets expecting Trump to scale back his rhetoric?

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US DOLLAR INDEX

The US Dollar Index (DXY, USDX) measures the value of the United States Dollar relative to a basket of foreign currencies. It is a weighted geometric mean of the dollar’s value relative to the following select currencies: Euro (57.6% weight), Japanese Yen (13.6%), British Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%) and Swiss Franc (3.6%).
The index started in 1973, following the dissolution of the Bretton Woods system, with a base value of 100.00. Values are relative to this base – for instance, a current reading of 99.800 would indicate that the dollar has depreciated by 0.2% since the start of the index.

While the Dollar Index is a geometrically weighted index rather than trade-weighted, it is concentrated in European currencies and excludes two of the US’ top trading partners, Mexico and China. As a result, it is primarily used as a speculative tool rather than by corporates or asset managers like mutual funds, insurance companies or endowments. Additionally, the geometric mean methodology artificially undervalues the USD over time.

INFLUENTIAL ORGANIZATIONS AND ECONOMIC DATA FOR THE US DOLLAR INDEX

The Federal Reserve (Fed)

The Federal Reserve (Fed) is the central bank of the United States (US) and it has two main targets: to maintain the unemployment rate at its lowest possible levels and to keep inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors and the partially appointed Federal Open Market Committee (FOMC). The FOMC organizes eight scheduled meetings in a year to review economic and financial conditions. It also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. The FOMC Minutes, which are released by the Board of Governors of the Federal Reserve weeks after the latest meeting, are a guide to the future US interest-rate policy.

The US Government

The US Government and its Treasury Department impact the US Dollar Index. Events such as administration statements, budgets, new laws and regulations or fiscal policy can increase or decrease the value of the DXY.

US Gross Domestic Product

US Gross Domestic Product (GDP) refers to the total market value of all final goods and services produced in the United States. It serves as a gross measure of market activity, indicating the pace at which the nation's economy is growing or contracting. Generally, a high reading or better-than-expected number is considered positive for the Dollar Index, while a low reading is seen as negative.