-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
Crypto: slight rebound within a bear market
Stocks perk up on Fed optimism, metals jump as dollar struggles
USD Softens as Rate-Cut Bets Rise; Pound Falls, Yen Firms, Oil Rebounds | 12th December 2025
The euro is on the edge of its seat
EBC Markets Briefing | Dow hits record; Visa and Mastercard upgraded
EUR/USD Surges on Dovish Fed Signals and Shifting Expectations
DNA Markets - Daily Fundamental Analysis Report, 12 December
