US Dollar Index bulls step back below 103.00 amid ‘neutral’ Fed talks, looming inflation woes


  • US Dollar Index fades bounce off one-week low, sidelined of late.
  • Fed Chair Powell signal one more rate hike in 2023, Vice Chair Barr highlights data dependency.
  • US inflation expectations remain firmer ahead of Fed’s favorite inflation gauge.
  • Dicey markets, quarter-end positioning also restrict DXY moves ahead of Thursday’s second-tier data.

US Dollar Index (DXY) struggles to keep the previous day’s bounce off weekly low around 102.65 amid mixed signals from the Federal Reserve (Fed) officials despite inflation woes, as well as due to the recently receding banking fears.

Corrective bounce in the US Treasury bond yields joined the quarter-end positioning and cautious optimism in the market to underpin the US Dollar’s latest rebound. Adding strength to the greenback’s rebound could be the geopolitical fears emanating from China, Russia and North Korea. However, an absence of hawkish comments from the Federal Reserve (Fed) officials joins the absence of talks about banking woes to weigh on the US Dollar.

The US blacklisting of Chinese companies and Beijing’s dislike of a meeting between the White House Speak and the Taiwan President can be considered the key catalysts to challenge the previously firmer sentiment and allowed the US Dollar to snap a two-day downtrend.  Though, optimism on the technology and banking front challenged the risk-off mood, as well as the DXY’s rebound.

It’s worth noting that the US inflation expectations, per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED), jumped to a two-week high the previous day and allowed the US Dollar to remain firmer.

However, Bloomberg came out with the news suggesting Fed Chair Jerome Powell showed forecasts for one more rate hike in 2023, which in turn pushed back talks of policy pivot and favor the US Dollar bulls. Though, Vice Chair for Supervision Michael Barr said, “We will be looking at incoming data, financial conditions to make a meeting-by-meeting judgment on rates.

Against this backdrop, Wall Street closed with notable gains led by tech and bank stocks while the US Treasury bond yields eased.

Looking ahead, the final readings of the US fourth quarter (Q4) Gross Domestic Product (GDP) will join the Q4 Core Personal Consumption Expenditure (PCE) details and the weekly jobless claims to direct intraday moves. However, Friday’s US Core PCE Price Index, the Fed’s favorite inflation gauge becomes crucial for the market to watch for clear directions.

Technical analysis

US Dollar Index bulls need to provide a daily closing beyond a three-week-old descending resistance line, around 102.90 by the press time, to retake control.

Dollar Index Spot

Overview
Today last price 102.65
Today Daily Change 0.22
Today Daily Change % 0.21
Today daily open 102.43
 
Trends
Daily SMA20 103.99
Daily SMA50 103.47
Daily SMA100 104.11
Daily SMA200 106.72
 
Levels
Previous Daily High 102.87
Previous Daily Low 102.38
Previous Weekly High 103.96
Previous Weekly Low 101.92
Previous Monthly High 105.36
Previous Monthly Low 100.81
Daily Fibonacci 38.2% 102.57
Daily Fibonacci 61.8% 102.68
Daily Pivot Point S1 102.25
Daily Pivot Point S2 102.07
Daily Pivot Point S3 101.77
Daily Pivot Point R1 102.74
Daily Pivot Point R2 103.04
Daily Pivot Point R3 103.22

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD faces the next hurdle at 0.6400

AUD/USD faces the next hurdle at 0.6400

AUD/USD rose markedly and approached the key 0.6400 hurdle at the beginning of the week, always in response to rising weakness in the US Dollar and hopes of fresh stimulus in China.

AUD/USD News
EUR/USD keeps the upside target at 1.1000

EUR/USD keeps the upside target at 1.1000

EUR/USD extended further Friday’s recovery and traded at shouting distance from the YTD peaks near 1.0950 in response to increased selling pressure in the Greenback and the improved political scenario in Germany.

EUR/USD News
Gold consolidates around $3,000 ahead of Fed

Gold consolidates around $3,000 ahead of Fed

Gold prices has started the week on a positive tone and maintains their trade around the key $3,000 mark per troy ounce on the back of the modest pullback in the Greenback and mixed US yields across the curve,

Gold News
Crypto markets could gain $1 trillion as Gold price reaches $3,000: Tokenized-Gold expert explains

Crypto markets could gain $1 trillion as Gold price reaches $3,000: Tokenized-Gold expert explains

Tokenized-Gold assets hit a $1.8 billion market cap on Monday after the Gold (XAU) price marked new all-time highs above $3,000 per troy ounce. In an exclusive interview with FXStreet, RAAC CEO Kevin Rusher explains how tokenized Gold assets could impact the next crypto market recovery phase.

Read more
Five Fundamentals for the week: Fed leads central bank parade as uncertainty remains extreme

Five Fundamentals for the week: Fed leads central bank parade as uncertainty remains extreme Premium

Central bank bonanza – perhaps its is not as exciting as comments from the White House, but central banks still have sway. They have a chance to share insights about the impact of tariffs, especially when they come from the world's most powerful central bank, the Fed.  

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025