The US Dollar Index trades lower for the second consecutive session following Federal Reserve Chair Jerome Powell's testimony, which indicated a data-dependent approach to monetary policy and reduced the likelihood of a rate cut at the March meeting. Investors are cautiously evaluating Powell's neutral stance on interest rates, while technical indicators suggest a weakening dollar.
The US Dollar Index ( DXY ) continues to decline for the second consecutive day, trading above 108.00 without a clear direction. This downward trend follows Federal Reserve Chair Jerome Powell 's testimony to Congress, where he emphasized a data-dependent approach to monetary policy . Powell indicated that interest rates would remain stable unless there are significant shifts in inflation or labor conditions, reducing the likelihood of a rate cut at the March meeting.
Powell's testimony, while not as hawkish as some anticipated, has had a notable impact on market sentiment. Investors are cautiously digesting his neutral stance on interest rates and trade, with the CME FedWatch Tool projecting a 90% probability of the Fed maintaining rates at 4.25%-4.50% in March. Meanwhile, the US 10-year yield is edging higher toward 4.55%, recovering from a year-to-date low of 4.40% reached last week. Technical indicators suggest a weakening dollar, with the DXY index slipping below its 20-day Simple Moving Average (SMA) around 108.50. The Relative Strength Index (RSI) is declining, approaching bearish territory below 50, while the Moving Average Convergence Divergence (MACD) histogram is turning negative, indicating increasing bearish pressure. If selling pressure intensifies, immediate support is found at 108.00, followed by the psychological level of 107.50. Conversely, resistance is seen at 108.80 and the 109.20 zone, which could limit short-term rebounds.
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