US Dollar Index recovers to 105.00 after Fed projects rates fo exceed 5% in 2024
- DXY recovered ground, trading between 105.00 and 105.20, following the Fed’s decision to hold rates unchanged.
- Fed’s upward revision of 2024 interest rates from 4.6% to 5.1% halts the US Dollar’s fall.
- Market eyes now turn to Fed Chair Jerome Powell’s press conference at 18:30 GMT for further cues.
The US Dollar Index (DXY), which tracks the Greenback’s performance against a basket of six currencies, recovers some ground, as the Federal Reserve (Fed) holds rates unchanged while keeping the door open for further tightening. At the time of writing, the DXY trades seesaw within the 105.00/105.20 range.
DXY Trades in 105.00/105.20 Range as Fed Keeps Rates Steady but Signals Future Tightening
As anticipated, the Fed kept interest rates unchanged and projects an additional rate hike in 2023. The FOMC’s monetary policy statement emphasized high inflation, while Fed officials noted solid economic growth and a strong labor market.
While the monetary policy statement didn’t undergo significant changes compared to the previous decision, the sudden strength of the US Dollar was the Fed officials’ upward revision of interest rates for 2024, increasing it from 4.6% to 5.1%. This adjustment contributed to the US Dollar’s sudden surge.
That said, market participants’ focus shifted toward the Fed Chair Jerome Powell’s press conference at 18:30 GMT.
US Dollar Index market’s reaction
On the Fed statement release, the DXY rallied above the 105.00 figure, hit 105.19, and retreated toward the 105.00 mark. If Fed Chair Jerome Powell delivers hawkish remarks, upside risks remain, with the daily high of 105.25 up next as resistance, followed by the September 14 high at 105.43. Conversely, expect a re-test of the daily low of 104.66.
US Dollar Index Key Technical Levels
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
