- DXy stops around 103.95 because the market sentiment remains fragile.
- Traders Eye Wednesday data on US CPI for the fresh market.
- Nasdaq slides 3.3%, dragging wider shares lower.
The US dollar (USD) remains under pressure on Monday, with DXy hovering around 103.95 and trying to find traction after a steep decline last week. Federal reserve (Fed) The last remarks by chairman Jerome Powell on Friday assured the markets that the central bank at present does not see the urgent need to modify policy, although economic uncertainties are growing. Meanwhile, NASDAQ faces strong market losses, by 3.3%, as investors remain careful about the key data of the United States (US).
Daily Digest Market Movers: Feed in Fecus as CPI weaving
- Market participants will solidify on Wednesday to issue the February Consumer Price Index (CPI) and expect to provide key information about inflationary trends.
- The federal reserve system enters its output period before the session of March 19 and limits the commentary of the central bank per week.
- Fed chairman Jerome Powell reiterated on Friday that the Fed remains patient and does not see the urgent need to act, rather to wait for further economic data before making any policy changes.
- US stocks face sharp correction, with the leading losses of NASDAQ by 3.3%.
- CME Fedwatch suggests that the majority expectations that rates will remain on current levels in May, while expectations of the June rate increased significantly.
- Before the Blackout Media, the Fed sentiment index in the daily chart fell to neutral soil, which could also explain a decline in USD.
Technical outlook DXY: Support for testing near 103.50
US Dollar index (DXY) is stabilized below 104.00 and after last week a steep decline in last week. The 20 -day and 100 -day simple moving diameters (SMA) confirmed the bear crossover near 107.00, which strengthened a negative trend. The relative strength index (RSI) remains near the pre -selling area, which signals the potential for a short -term reflection. Meanwhile, the divergence of the convergence of the gliding diameter (MACD) remains, indicating another risk of disadvantage if the buyer enters close levels of support. If DXY fails to regenerate 104.50, additional support is visible near 103.30, which could determine whether a deeper decline took place.
Fed Faqs
The US currency policy is formed by a federal reserve (Fed). The Fed has two mandates: to achieve price stability and support full job. Its primary tool for achieving these goals is to adjust interest rates. When prices are rising too fast and inflation is above 2% the aim of the Fed, it increases interest rates and increases the cost of loans throughout the economy. This results in a stronger US dollar (USD), because the US is doing a more attractive place for international investors to park their money. When inflation falls below 2% or the unemployment rate is too high, the Fed can reduce interest rates to support loans, which weighs on green binding.
The Federal Reserve (Fed) organizes eight political meetings annually, where the Federal Committee with an open market (FOMC) evaluates economic conditions and decides on monetary policy. FUMC will be attended by twelve Fedu-Sa because of the Governor Council members, the President of the Federal Reserve Bank in New York, and four of the remaining eleven regional reserve bank presidents who serve the seasons annually.
In extreme situations, the federal reserve system can resort to policy called quantitative release (QE). QE is a process by which the Fed significantly increases the flow of the loan in the stuck financial system. It is a non -standard political measure used during crisis or when inflation is extremely low. It was a fed weapon during the major financial crisis in 2008. It includes more dollars and their use to buy high quality bonds from financial institutions. QE usually weakens the US dollar.
Quantitative tightening (QT) is a QE reverse process, while the federal reserve system stops buying bonds from financial institutions and does not build the principal of the bonds that it has ripened for new bonds. It is usually positive for the value of the US dollar.
