Bull’s Eye 103.00 on Hawkish Fed Clues for the U.S. Dollar Index

Despite recent immobility at 102.60 in the early hours of Wednesday, the U.S. Dollar Index has been stronger for four days running. This illustrates how the market is positioning itself for Federal Reserve (Fed) Chair Jerome Powell’s biannual testimony in the hopes of seeing further gains for the U.S. Dollar Index, particularly when the Fed policymakers support higher rates, and the sentiment is uncertain.

Nevertheless, the news that U.S. President Joe Biden described Chinese President Xi Jinping as a tyrant on Tuesday prompted the U.S. Dollar Index bulls to trade close to the day’s high. The remarks raise grave worries about US-China relations after U.S. Secretary of State Antony Blinken’s trip to Beijing produced few notable successes. The same ought to provide the Gold pair sellers reason for hope.

It should be mentioned that the demand for the U.S. Dollar as a Safe Haven increased when the People’s Bank of China (PBoC) decreased the two Major lending rates (the Loan Prime Rate (LPR) and Medium-term Landing Facility (MLF) rate) for the first time in over a year.

Regarding the signals from the central bank, Fed governor and Vice Chair candidate Philip Jefferson stated, “I remain focused on returning it to our 2% target.” Federal Reserve Governor Lisa Cook echoed similar sentiments in a statement she would deliver before the Senate on Wednesday, saying, “I am committed to promoting sustained economic growth in a context of low and stable inflation.” Adriana Kugler, a candidate for the Fed Board, mentioned the necessity of getting inflation back to its 2% aim in her remarks, according to the prepared statements for Wednesday’s Testimony. The U.S. economy will benefit from this by getting off to a strong start.

Additionally, U.S. housing starts increased by 21.7% MoM in May VS a -2.9% (updated from +2.2%) recorded in April and a -0.8% market projection, which favors the U.S. Dollar Index bulls and brought them to their highest level since April 2022. Building Permits, which were up 5.2% MoM for the aforementioned month compared to -5.0% projected and -1.4% prior readings (updated from -1.5%), were also encouraging.

Amid these maneuvers, the Wall Street benchmark started the week on the downbeat side, but S&P500 Futures are still dormant, and U.S. Treasury bond rates likewise ended a two-day winning streak the day before exhibiting recent early-day inactivity.

Looking forward, the U.S. Dollar Index traders may face difficulties due to a light schedule before Fed Chair Jerome Powell’s biannual testimony. The U.S. Dollar Index may have further potential to watch should Fed Chair Powell support the hawkish stance of the U.S. central bank.

Dollar Index Long (Buy)
Enter At: 103.160
T.P_1: 104.302
T.P_2: 106.922
T.P_3: 109.833
T.P_4: 112.308
T.P_5: 115.073
T.P_6: 117.984
T.P_7: 120.750
T.P_8: 122.609
T.P_9: 125.974
S.L: 100.556

US Dollar Index


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