Investors Bet on June Fed Easing Cycle, Boosting US Dollar

USD Index image

The US Dollar Index (DXY) trades near mid-February highs around 104.428, fueled by expectations that the Federal Reserve’s easing cycle will likely begin in June. This sentiment is reinforced by recent economic data.

Key Factors:

  • Resilient US Economy: A robust labor market and persistent inflation strengthen the case for the Fed’s policy shift.
  • PCE Data Anticipation: Next week’s February Personal Consumption Expenditures (PCE) release could provide further market direction.
  • Dovish Fed Interpretation: The Fed’s dismissal of recent inflation increases and unchanged 2024 rate projections boost the US Dollar.

Technical Outlook:

  • Bullish Indicators: The RSI slopes upward in positive territory, and the MACD shows increasing green bars, signaling potential further gains.
  • Key SMAs: The DXY trades above the convergence of the 20, 100, and 200-day SMAs (near 103.50-103.70), bolstering the bullish bias.

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