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.