The US dollar is moving cautiously as traders react to the Federal Reserve’s latest signals on interest rates. While Powell’s comments reassured markets about future rate cuts, uncertainty around global trade and geopolitical tensions keeps investors on edge. With the dollar stuck in a tight range, analysts are watching key technical levels for clues on its next move.
The US Dollar Index (USDX) traded sideways after Federal Reserve Chair Jerome Powell’s latest comments, showing limited reaction to the central bank’s decision to keep interest rates unchanged.
The index hovered around 103.22, reflecting the market’s cautious stance as investors awaited further economic signals.
Powell reaffirmed the Federal Reserve’s plan for two rate cuts in 2025, helping to ease broader market concerns.
While this announcement fuelled a rally across the three major US stock indices, the dollar’s performance remained lacklustre.
Market sentiment appeared to favour the prospect of lower borrowing costs, but the USDX continued its consolidation, failing to break out of its tight trading range.
The USDX recorded a 0.20% gain, closing at 103.221 after opening at 103.01. The session saw a notable uptick, reaching a high of 103.544 before retreating slightly.
Technical indicators suggest a bullish bias, with short-term moving averages (MA 5,10,30) maintaining a position above longer-term averages, signalling sustained upward momentum.
The MACD (12,26,9) also indicates strong bullish pressure, with an expanding histogram and the MACD line trending above the signal line.
Key levels to monitor include 103.271 as immediate resistance and 102.814 as key support.
A breakout above resistance could drive further gains, while a decline below support might shift sentiment towards a more neutral or bearish outlook.
Despite Powell’s reaffirmation of future rate cuts, external factors such as global trade policies and geopolitical tensions continue to weigh on the greenback.
The USDX’s next significant move will likely depend on further clarity from the Federal Reserve and developments in global economic conditions, including ongoing geopolitical risks in the Middle East.
Traders should stay alert to upcoming economic data releases and Fed communications, which could provide fresh direction for the US dollar in the coming weeks.
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