- The dollar index collapses to about 98.35 in the first bars of the European session on Thursday, losing 0.26% in the day.
- The negative perspective of the index is maintained below the 100 -day EMA.
- The crucial support level to be monitored is the region of 98.10-98.00; The first upward barrier is observed at 99.38.
The US dollar index (DXY), an index of the value of the US dollar (USD) measured against a basket of six world currencies, collapses to the lowest level in seven weeks about 98.35 due to the growing expectations of feat cuts by the Federal Reserve (Fed) this year and the persistent uncertainty over tariff battles. Investors will focus on the US Production Price Index (IPP).
Technically, DXY’s bearish feeling remains intact since the index is below the average exponential (EMA) medium key of 100 days in the daily chart. The downward impulse is reinforced by the 14 -day relative force (RSI) index, which is below the midline about 38.80, suggesting that a greater decrease seems favorable in the short term.
The key support level for the US dollar index is located in the area of ​​98.10-98.00, representing the lower limit of the Bollinger band and the psychological level. A rupture of this level could expose 97.70, the minimum of March 30, 2022. More to the south, the following bearish objective to be monitored is 96.55, the minimum of February 25, 2022.
On the positive side, the maximum of June 10 in 99.38 acts as an immediate level of resistance for the DXY. The additional filter is observed in the 100.00 psychological brand. Extended profits could see a rally around 100.60, the upper limit of the Bollinger band.
DAILY DOLL OF THE DOLL OF THE DOLL 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.
