DXY Firmer on Tuesday
The US Dollar is trading a little firmer through the European open today as traders digest comments from a raft of Fed officials yesterday. Coming hot on the back of the September FOMC last week, traders were keen to receive a deeper insight into Fed sentiment given the dovish developments we saw last week. The fed cut rates by .25% while signalling a furtehr two rate-cuts ahead this year. However, some concerns over lingering inflation risks and an upwardly revised set of growth forecasts caused some uncertainty on the back of the meeting, preventing USD from selling off and instead seeing DXY squeeze higher.
Hawkish Fed Commentary
Yesterday, Fed officials were heard sounding more concerned over inflation and urging caution with rate cuts. St Louis Fed present Musalem warned that the Fed should tread carefully with rate reductions warning that, accounting for inflation, the policy rate might already be around the neutral level. Fed’s Bostic echoed this sentiment in a Wall Street Journal interview warning that the focus should remain on getting inflation back to target, arguing that no further cuts were needed this year. These comments show that despite the full support for a September rate-cut, furtehr cuts will certainly be a more divisive issue and are therefore not guaranteed. Looking ahead today, traders will now focus on Fed chair Powell who speaks later.
Technical Views
DXY
For now, the index remains above the 96.63 level and while this area holds, we have a potential double bottom in play suggesting a furtehr recovery higher towards 98.24 and 99.15. If we break lower, however, focus shifts to 94.85 as the deeper bear target.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.