While the market is anticipating lower CPI numbers than in January, which doesn’t play well for USD’s bullish case, the American dollar has been on a tear. Federal Reserve's decision to maintain interest rates and not cut rates in March was apparently a clear sign for the market to lean towards a more bullish stance on the US Dollar in a complex economic landscape.
Although many experts from the large banks think that the Fed should’ve already cut rates because the rates are too high for too long. Especially if the CPI number docile in lower than last month, showing that inflation is sinking, while the rates are still at 5.5% The Fed is still committed to their 2% target. This indicates a careful balancing act between promoting economic growth and controlling inflation.
Technical analysis: The U.S. Dollar Index (DXY), has been in a consolidation phase for a rather long time. When it finally broke out and closed above it, it showed that the bulls are taking over control and pushed the price to its major resistance at 104.50. It rejected off of that level and made a correction. While doing so, it created a bullish flag pattern which is usually formed before a push upwards.
The support lies at 103.80, which presents a retest opportunity for DXY. As long as we don’t break and close below that level, the bulls should be in control and we should see another attempt of breaking the 104.50 resistance. Otherwise, if the price does break below and enters the channel again, the support is at 103.00 and the price might consolidate again.
We are waiting to see the market’s reaction to the CPI data, while still holding our buy positions and we set a trailing stop on the positions and let them run. As long as the DXY doesn't break back into the channel, we are bullish on the dollar and are looking of long opportunities.
Although many experts from the large banks think that the Fed should’ve already cut rates because the rates are too high for too long. Especially if the CPI number docile in lower than last month, showing that inflation is sinking, while the rates are still at 5.5% The Fed is still committed to their 2% target. This indicates a careful balancing act between promoting economic growth and controlling inflation.
Technical analysis: The U.S. Dollar Index (DXY), has been in a consolidation phase for a rather long time. When it finally broke out and closed above it, it showed that the bulls are taking over control and pushed the price to its major resistance at 104.50. It rejected off of that level and made a correction. While doing so, it created a bullish flag pattern which is usually formed before a push upwards.
The support lies at 103.80, which presents a retest opportunity for DXY. As long as we don’t break and close below that level, the bulls should be in control and we should see another attempt of breaking the 104.50 resistance. Otherwise, if the price does break below and enters the channel again, the support is at 103.00 and the price might consolidate again.
We are waiting to see the market’s reaction to the CPI data, while still holding our buy positions and we set a trailing stop on the positions and let them run. As long as the DXY doesn't break back into the channel, we are bullish on the dollar and are looking of long opportunities.