- The US dollar index is quoted by about 98.55 in the first bars of the European session on Wednesday, losing 0.28% in the day.
- The negative perspective of the index is maintained below the 100 -day EMA with a bearish RSI indicator.
- The first level of support to be observed is in the area of ​​98.00-97.90; The key level of resistance to observe is the psychological level of 100.00.
The US dollar index (DXY), an index of the value of the US dollar (USD) measured in front of a basket of six world currencies, attracts some sellers around 98.55 during the first hours of negotiation in Europe on Wednesday. The operators continue to evaluate the conflict between Israel and Iran before a decision of the Federal Reserve (FED) about interest rates later on Wednesday.
According to the daily chart, the dxy bassist perspective remains intact, with the index keeping below the 100 -day key EMA. A greater descent seems favorable since the 14 -day RSI is below the midline about 43.80.
The initial support level for the USD index is in the 98.00-97.90 area, representing the psychological level and lower limit of the Bollinger band. A sustained trade below the mentioned level could expose 97.61, the minimum of June 12. A rupture of this level could lead to a fall to 96.55, the minimum of February 25, 2022.
On the other hand, the key resistance level for the DXY arises in 100.00, representing the psychological figure and the upper limit of the Bollinger band. A decisive rupture above this level could pave the road to 101.65, the 100 -day EMA. The next upward barrier is observed in 101.98, the maximum of May 12.
DAILY GRAPH OF THE US DOLLAR INDEX (DXY)
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
