US Dollar Index declines towards 105.50 as Fed’s bigger rate hike regime reaches endgame


  • The US Dollar is expected to test its three-month low at 105.35 amid sheer optimism in global markets.
  • Fed’s Powell would shift to a 50 bps rate hike option as inflation is still in a persistent stage.
  • Investors should brace for a higher Fed’s terminal rate as achievement of price stability is still far.

The US dollar index (DXY) is oscillating inches far from the round-level support of 106.00 in the Tokyo session. The US dollar witnessed a vertical fall on Wednesday after surrendering the critical support of 107.00. The mighty US Dollar went through intense selling pressure as investors ditched the risk aversion theme. The reasoning behind a sell-off in the US Dollar is soaring expectations for a lower shift in the interest rate hike in the upcoming December monetary policy.

Investors should be aware of the fact that the US markets will be closed on Thursday on account of Thanksgiving Day.

FOMC minutes clear that 75 bps rate hike regime has reached the endgame

The minutes of the Federal Open Market Committee released in the late New York session dictated that the majority of the Federal Reserve (Fed) policymakers have vouched for a slowdown in the rate hike pace to allow room to judge the progress of the efforts and to reduce financial risks. This indicates that there would be no fifth consecutive 75 basis points (bps) rate hike by the Fed.

Most probably, Fed chair Jerome Powell will shift to a 50 bps rate hike as inflation is still in a persistent stage. For the targeted rate, the Fed believes that the catalyst will go higher.

Upbeat US Durable Goods Orders failed to support the US Dollar

The US Durable Goods orders delivered a stellar performance on Wednesday after landing at 1.0%, higher than the expectations and the prior release of 0.4%. This claims that demand for durable goods is robust and the core Consumer Price Index (CPI) could show some reluctance in displaying any further ease. There is no denying the fact that households in the United States are running at lower real income due to higher inflationary pressure. Therefore, the households would be required to rely upon borrowings for funding the purchase of durable goods.

Dollar Index Spot

Overview
Today last price 105.93
Today Daily Change -0.21
Today Daily Change % -0.20
Today daily open 106.14
 
Trends
Daily SMA20 107.94
Daily SMA50 110.49
Daily SMA100 109.27
Daily SMA200 105.68
 
Levels
Previous Daily High 107.23
Previous Daily Low 106.03
Previous Weekly High 107.27
Previous Weekly Low 105.32
Previous Monthly High 113.95
Previous Monthly Low 109.54
Daily Fibonacci 38.2% 106.49
Daily Fibonacci 61.8% 106.77
Daily Pivot Point S1 105.71
Daily Pivot Point S2 105.27
Daily Pivot Point S3 104.51
Daily Pivot Point R1 106.9
Daily Pivot Point R2 107.66
Daily Pivot Point R3 108.1

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD retreats to 1.0850 area as US Dollar rebounds

EUR/USD retreats to 1.0850 area as US Dollar rebounds

EUR/USD has extended its slide toward 1.0850 in the American session. Profit-taking ahead of the weekend and the negative shift witnessed in risk sentiment seems to be helping the US Dollar gather strength against its rivals, weighing on the pair.

EUR/USD News

GBP/USD trades on the back foot below 1.2400

GBP/USD trades on the back foot below 1.2400

GBP/USD is having a difficult time gathering recovery momentum and trading in negative territory below 1.2400 on Friday. Although the data from the US showed that PCE inflation continued to soften in December, the US Dollar holds its ground heading into the weekend.

GBP/USD News

Gold struggles to hold above $1,930

Gold struggles to hold above $1,930

Gold price has lost its traction and declined below $1,930 during the American trading hours. The benchmark 10-year US Treasury bond yield clings to modest daily gains above 3.5% ahead of the weekend, not allowing XAU/USD to gain traction.

Gold News

Is the dramatic rise in whale activity in AAVE, MATIC and DYDX a sell signal?

Is the dramatic rise in whale activity in AAVE, MATIC and DYDX a sell signal?

AAVE, MATIC and DYDX price rallied alongside large market capitalization cryptocurrencies Bitcoin and Ethereum in January. Experts at the crypto intelligence tracker Santiment believe the recent spike in activity by whales on these networks needs to be watched closely.

Read more

Breaking: US annual Core PCE inflation declines to 4.4% in December as expected

Breaking: US annual Core PCE inflation declines to 4.4% in December as expected

Inflation in the US, as measured by the Personal Consumption Expenditures (PCE) Price Index, declined to 5% on a yearly basis in December from 5.5% in November, the US Bureau of Economic Analysis reported on Friday.

Read more

Forex MAJORS

Cryptocurrencies

Signatures