- The DXY trades near the 104.30 area after a modest upward reaction to economic data.
- Traders weigh durable goods strength and fresh copper tariff comments against geopolitical ceasefire noise.
- Resistance aligns near 104.53, while 104.09 acts as short-term support.
The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of currencies, is holding near the 104.30 zone during Wednesday’s session. A better than expected print in February’s Durable Goods Orders, coupled with hawkish rhetoric from Fed officials, is helping the Greenback edge higher. However, momentum indicators remain conflicted, hinting at a still fragile upside.
Daily digest market movers: US Dollar steadies as data, Fed comments offset risk sentiment shift
- The Greenback benefits from stronger than forecast US Durable Goods Orders for February, which also saw prior data revised upward.
- US President Donald Trump announced copper tariffs will arrive sooner than markets projected, aiding USD traction.
- A potential ceasefire in the Black Sea between Ukraine and Russia created early downside for the DXY, but peace talks face major hurdles.
- Russia’s demands to lift all sanctions on agriculture and banking in exchange for ceasefire compliance cloud optimism.
- Fed’s Neel Kashkari reiterated that inflation progress remains incomplete, reinforcing expectations for prolonged restrictive policy.
- Traders remain sensitive to PCE data this week amid rising uncertainty about the rate path.
- Market participants cautiously assess tariff headlines and geopolitical signals, balancing risk appetite against Fed tightening signals.
DXY technical analysis: Mildly bullish tone pervades market
The US Dollar Index shows a mildly bullish tone in Wednesday’s session, trading within the 104.18–104.46 range. While the Moving Average Convergence Divergence (MACD) prints a slight buy signal, broader pressure remains bearish as the 20-day, 100-day, and 200-day Simple Moving Averages (SMAs) all signal selling.
The 30-day Exponential Moving Average (EMA) and SMA continue to act as upper barriers. The Relative Strength Index (RSI) appears neutral when paired with the stochastic, though short-term momentum remains weak. Key resistance lies at 104.43, 104.47 and 104.53, while immediate supports sit at 104.09 and 103.84.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
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