The U.S. greenback is having a mid-week disaster!

Okay, “disaster” may be an exaggeration.

However the U.S. greenback index (DXY) did see a mid-week reversal!

U.S. Greenback Index (DXY): 1-hour

U.S. Greenback Index (DXY) 1-Hour Foreign exchange Chart by TradingView

Simply because the index was extending a downtrend that began on March 8, sufficient bulls stepped in and defended the 102.40 stage.

DXY is now buying and selling nearer to 102.80, which is correct again at a descending channel resistance on the 1-hour time-frame.

What’s extra, the extent additionally strains up with a key assist zone from mid-February.

Final however not the least, DXY’s present ranges are close to the 100 and 200 SMA resistance zones.

Will we see a breakout within the subsequent buying and selling classes?

It depends upon whether or not the markets will return to pricing rate of interest hikes from the Fed.

Recall that the U.S. greenback began dropping not solely from native banking sector issues however from the bias that the Fed miiiight take into account fee cuts as early as this yr.

With Uncle Sam’s core PCE index – the Fed’s most well-liked inflation gauge – developing tomorrow at 12:30 pm GMT, focus will flip again to the Fed’s tightening plans.

If inflation proves to be stickier than markets expect in February, then the Fed won’t have a lot selection however to lift its charges once more. On the very least, it could ease among the markets’ fee reduce expectations.

DXY may break above its channel and the SMAs and retest earlier areas of curiosity like 103.00 or 103.40.

But when shopper costs decelerates additional, then fee reduce expectations would achieve momentum and possibly drag the greenback decrease.

DXY may lengthen its drop and revisit final week’s lows close to 102.00.

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