US Dollar Index Moves Cautiously, Market Awaits New Signals from the Fed
The US Dollar Index (DXY) traded in a consolidation pattern this morning, as investors await the Federal Reserve's latest policy release, scheduled for this week. Market participants believe that the future direction of interest rates will significantly determine the dollar's attractiveness against other major currencies.
Fundamentally, the dollar is facing pressure from rising expectations of interest rate cuts. Several recent economic data indicate a slowdown in the labor market, while core inflation remains above the central bank's target. This situation makes the Fed's monetary policy outlook appear more cautious, with the possibility of a slower rate cut path than market expectations.
Furthermore, global risk sentiment and the comparison of yields with other currencies are also pressuring the dollar index. The trend of weakening US government bond yields has also reduced the attractiveness of dollar-denominated assets as an investment destination.
Technically, the dollar index remains within a narrow range. The nearest support is in the 96.50–97.00 area, while major resistance is seen in the 98.50–99.00 range. If the DXY manages to break through the psychological level of 99.00, the upward momentum could potentially continue toward 100. However, failure to hold above support could open the door to a deeper decline to the 95.00 area.
The momentum indicator also shows a neutral to slightly bearish trend, indicating the market is still awaiting a stronger catalyst. Given this situation, market participants are expected to remain cautious until the release of the FOMC decision and the latest dot plot, which could provide clearer clues regarding the future direction of US monetary policy.
Source: Newsmaker.id
