- The American dollar index rises, recovering from previous losses.
- Germany plans to inject 0.5 billion euros in fiscal spending.
- Geopolitical uncertainty increases as Trump and Putin maintain key discussions.
- Economic indicators show resilience despite market volatility.
The US dollar index (DXY), which measures the value of the dollar against a basket of six currencies, is stabilizing after avoiding a new minimum of five months. The operators react to the significant fiscal expansion of Germany while monitoring the geopolitical risks linked to the ongoing conversations between the US president Donald Trump and the Russian president Vladimir Putin. The index recovered from the previous falls as the feeling changed.
What moves the market today: the US dollar stabilizes in the midst of economic data
- High level conversations between Trump and Putin continue with reports that indicate discussions on territorial issues, which generates concerns about European security and NATO response.
- The tax expansion of Germany is promoting the feeling of the market, with an increase in government spending that is expected to impact European economic stability.
- In the US Data Front, February construction permits slightly exceeded expectations, but decreased compared to January levels.
- The beginnings of housing shot themselves, reflecting continuous strength in the housing market despite the broader economic uncertainties.
- Export and import prices increased more than anticipated, adding concerns about inflation.
- Industrial production expanded at a robust rhythm, pointing out resilience in American manufacturing.
- European actions are on the rise for optimism around the increase in Germany’s expenditure, while US actions are under pressure.
- The Federal Reserve is expected to maintain the stable rates on Wednesday, with the market indicating little change in the tone and position of the Central Bank on the next decision.
Technical analysis: the index of the US dollar recovers land but remains under key levels of resistance
The US dollar index is trying to recover strength, although it remains close to minimum of several months. The Relative Force Index (RSI) is leaving the territory of overall, suggesting a possible recovery, while the histogram of the convergence/divergence of mobile socks (MACD) continues to indicate a bearish impulse, although the low pressure is decreasing.
The resistance is observed in 104.20, followed by 104.80 and 105.20, marking key levels of rupture. The support is maintained at 103.40, with a downward break exposing 102.90. While the short -term impulse is being recovered, the index remains below its simple 50 and 200 days mobile socks, noting that a sustained upward trend has not yet been formed.
Fed Faqs
The monetary policy of the United States is directed by the Federal Reserve (FED). The Fed has two mandates: to achieve prices stability and promote full employment. Its main tool to achieve these objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the objective of 2% set by the Federal Reserve, it rises interest rates, increasing the costs of loans throughout the economy. This translates into a strengthening of the US dollar (USD), since it makes the United States a more attractive place for international investors to place their money. When inflation falls below 2% or the unemployment rate is too high, the Federal Reserve can lower interest rates to foster indebtedness, which weighs on the green ticket.
The Federal Reserve (FED) celebrates eight meetings per year, in which the Federal Open Market Committee (FOMC) evaluates the economic situation and makes monetary policy decisions. The FOMC is made up of twelve officials of the Federal Reserve: the seven members of the Council of Governors, the president of the Bank of the Federal Reserve of New York and four of the eleven presidents of the regional banks of the Reserve, who exercise their positions for a year in a rotary form.
In extreme situations, the Federal Reserve can resort to a policy called Quantitative Easing (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non -standard policy measure used during crises or when inflation is extremely low. It was the weapon chosen by the Fed during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy high quality bonds of financial institutions. The one usually weakens the US dollar.
The quantitative hardening (QT) is the inverse process to the QE, for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the bonds that it has in portfolio that they expire, to buy new bonds. It is usually positive for the value of 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.
