-11122024742.png)
-11122024742.png)
Dollar Index: Slowly Forming a Bottom
Dollar Index: Slowly Forming a Bottom
The US Dollar has been trading in a tight range against its major rivals for the past two weeks, and the Dollar Index is gently forming a bottom after an impressive oversold condition. However, traders are advised to be patient. Last August, the dollar was similarly oversold, which coincided with weakness in US equities. However, it took more than a month for the Dollar Index to rally strongly. In other words, a low Relative Strength Index is not in itself a buy signal. One should not succumb to FOMO and look for a low to buy. It makes much more sense to join the uptrend when it is already in place.
Earlier this week, the Fed sent a mixed signal to the markets. On the one hand, it lowered its GDP growth forecasts for the current year but also raised inflation expectations. The former brings us closer to a rate cut, while the latter makes us wary of a spike in inflation as we saw three years ago.
We would guess that Powell is hardly a hawk. He is quite reactive to the stimulus to cut rates but has more than once delayed action when it is necessary to raise rates. This time, too, he will likely be tolerant of some increase in inflation if he sees weakness in the labour market or consumer demand.
By the FxPro Analyst Team
EBC Markets Briefing | European market of 2025 might be a one-hit wonder
Stocks at new records ahead of Fed, tech earnings; yen off highs
The Fed will make things clear
A Key Day for EUR/USD as the Fed Decision Looms
Crypto market continues to retreat
Technical Analysis – AUD/USD poised for more upside
EBC Markets Briefing | Hang Seng moves sideways; Intel back in profit
