US Dollar (DXY) Index News: Weaker as Japanese Yen Shows Resilence

US Dollar Index Under Pressure

The US Dollar is lower on Monday, influenced by multiple international factors. Japan’s potential currency intervention and China’s yuan surge are key drivers. US Treasury yields saw a minor rise, with investors eagerly awaiting forthcoming economic data for deeper insights.

At 14:15 GMT, the U.S. Dollar Index is trading 104.176, down 0.254 or -0.24%.

Fed’s Rate Policy and Economic Outlook

Last week’s hint from the Federal Reserve about a possible rate cut has markets on alert. The Fed, through Chairman Jerome Powell, indicated that the current policy rate might have peaked, with a possible reduction in policy restraint later this year. However, Powell also highlighted the uncertain economic outlook and the unguaranteed progress towards the 2% inflation objective.

Japanese Yen Gains Strength

The Japanese yen, strengthening slightly against the dollar, remained close to its four-month low. Despite Japan moving away from negative interest rates, a substantial interest rate gap with the US sustains the dollar’s attractiveness. Japanese officials, concerned about the yen’s decline, have started verbal interventions, creating a resistance point for the dollar/yen exchange rate.

European Currencies and Cryptocurrencies Bounce Back

European currencies recovered after last week’s decline, with the euro and sterling both rising. This shift follows the Federal Reserve’s stance on interest rate policies. Additionally, the cryptocurrency Bitcoin witnessed a significant increase, marking a partial recovery from its recent decline.

Economic Data and Market Anticipation

Key economic data releases, including the Fed’s favored inflation gauge, are on the horizon. These data points, along with statements from Fed officials, could influence market trends. However, with bond markets closed for Good Friday, reactions to these data may be delayed.

Market Forecast: Cautiously Bearish

In the short term, the US Dollar Index faces bearish tendencies due to the confluence of global currency shifts, the Federal Reserve’s cautious stance on interest rates, and impending economic data. This cautious approach reflects the current uncertainties in global financial markets.

Technical Analysis

The DXY is lower, but inside Friday’s trading range. The price action suggests investor indecision and impending volatility, but it could also mean the market is transitioning back to weaker after a two-day surge.

The nearest resistance is the February 14 top at 104.975. Taking out this top will signal a resumption of the major long-term trend.

The major support is the 50-day moving average at 103.725 and the 200-day moving average at 103.715. Crossing below these indicators will indicate a major shift in the intermediate and long-term momentum.