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US Dollar (DXY) Index News: Higher on Dovish Central Bank Policy Adjustments

By:
James Hyerczyk
Updated: Jun 20, 2024, 15:43 GMT+00:00

Key Points:

  • Dollar index climbs over 0.25%, driven by central bank decisions and market volatility. Swiss franc drops after SNB rate cut, supporting dollar strength.
  • Swiss franc falls 0.62% to 0.8897 francs after SNB cuts rates to 1.25%. The cut follows recent appreciation due to French political unrest.
  • Sterling declines 0.22% to $1.2689 after BoE decision. Traders expected a potential dovish stance supporting lower interest rates.
US Dollar (DXY) Index News:

Dollar Gains as Central Bank Decisions Drive Market

The dollar advanced on Thursday while the Swiss franc and British pound declined, as central bank decisions spurred activity among currency traders.

At 13:02 GMT, the U.S. Dollar Index is trading 105.512, up 0.287 or +0.27%.

Dollar Index and Swiss Franc Movements

The dollar index (DXY), which measures the greenback against a basket of six major currencies, rose to a high of 105.29. This follows a volatile period marked by mixed economic signals from the U.S. and European markets affected by French political uncertainty. The dollar was buoyed by a significant drop in the Swiss franc, which fell after the Swiss National Bank (SNB) cut interest rates to 1.25%, a follow-up to their March rate cut. Consequently, the dollar surged 0.62% to 0.8897 francs. The franc’s decline came despite recent appreciation driven by its safe-haven status amid French political unrest.

Sterling Weakens Ahead of BoE Decision

Sterling after the Bank of England’s (BoE) interest rate decision. The central bank maintained borrowing costs at a 16-year high of 5.25%. The pound dipped 0.22% to $1.2689, although it remained above the one-month low of $1.2658 observed last week. Market participants were cautious of a potential dovish stance from the BoE, indicating support for lower interest rates.

Volatile Euro Declines

Overall market volatility has increased recently due to European political uncertainty and speculation over central bank policies. The euro also fell 0.13% against the dollar, trading at $1.0728.

Yen and U.S. Economic Data

The Japanese yen dropped to its lowest level since April, with the dollar rising 0.25% to 158.45 yen. This followed statements from Japan’s currency diplomat affirming unlimited resources for forex interventions. In the U.S., retail sales data showing lower-than-expected figures contributed to a temporary dip in the dollar earlier this week, although manufacturing production data provided some support.

Market Forecast

The short-term outlook for the U.S. dollar appears bullish. The recent central bank decisions, particularly from the SNB and BoE, combined with political uncertainties in Europe, are likely to support continued strength in the dollar. Traders should monitor upcoming economic indicators and central bank communications for further cues on market direction.

Technical Analysis

Daily US Dollar Index (DXY)

The U.S. Dollar Index is sharply higher on Thursday after finding support on the 50-day moving average at 105.206. If this move continues to produce strong upside momentum then look for the rally to extend into the recent swing top at 105.805.

A failure to hold 105.206 will likely lead to a prolonged sideways trade with the 200-day moving average at 104.475 providing support.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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