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US Dollar Strengthens Ahead of Key Inflation and Fed Announcements

The US Dollar Index (DXY) extended its recent gains on Monday, edging closer to the 105.23 mark. This upward momentum, building on Friday’s rally, reflects continued confidence in the robust US economy.

Market attention remains firmly focused on Wednesday’s release of the May Consumer Price Index (CPI) and the subsequent Federal Reserve (Fed) meeting. These events will provide crucial insights into inflation trends and potential shifts in monetary policy.

Market Movers: Key Data and Fed Decision in Focus

  • Core CPI for May is expected to ease slightly to 3.5% year-over-year, while headline inflation is projected to remain steady at 3.4%.
  • The Fed is widely anticipated to maintain interest rates at 5.5% during its June 15-16 meeting. Any deviation from this expectation could trigger significant market volatility.
  • The Summary of Economic Projections and remarks by Fed Chairman Jerome Powell will be closely scrutinized for clues about the economic outlook.

DXY Technical Analysis: Bullish Momentum Remains Strong

The DXY Index has not only recovered from recent fluctuations but has also strengthened its position on the chart. The index is currently trading above its 20, 100, and 200-day Simple Moving Averages (SMA), indicating a bullish trend.

The Relative Strength Index (RSI) remains above 50, further supporting the bullish sentiment. Additionally, the Moving Average Convergence Divergence (MACD) suggests growing buying pressure at current levels.