US Dollar Gains Traction as Equities Search for Direction

USD Index image

The US Dollar (USD) is finally breaking free from its recent trading pattern and strengthening against most Asian currencies on Wednesday. This shift comes as the Japanese Yen (USD/JPY) weakens, potentially testing the resolve of Japanese authorities who intervened last week to curb its appreciation.

  • USD/JPY in Focus: The USD/JPY pair is trading above 155.00, erasing half of the gains made after Japan’s intervention. Markets are gauging Japanese officials’ willingness to intervene again if the pair approaches 160.00.
  • Fed Speakers in Spotlight: Today’s key event is a trio of speeches from prominent Federal Reserve officials, including Vice Chair Philip Jefferson, Boston Fed President Susan Collins, and Governor Lisa Cook. Their comments will be scrutinized for clues about the Fed’s future monetary policy stance.

Technical Analysis: DXY Aims Higher

  • The US Dollar Index (DXY) is attempting to regain some of the ground it lost earlier this year.
  • The direction of the DXY is likely influenced by the USD/JPY’s movement. A sustained rise in USD/JPY could lead to further USD strength.
  • Key resistance levels for the DXY include 105.52 (pivotal level since April 11th) and 106.52 (April 16th high). A decisive break above these levels could signal further upside potential.
  • Support for the DXY lies at the 55-day and 200-day SMAs (Simple Moving Averages) at 104.54 and 104.25, respectively.

The USD’s near-term trajectory depends on the outcome of the US-Japan currency battle, the pronouncements from Fed officials, and broader market risk sentiment.


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