On Friday, April 8, DXY was up by 0.14% during the UK session. The index is trading at 99.88 at the time of writing.
- DXY is edging close to the 100 mark as it reaches a two-year high.
- On Wednesday, Fed minutes revealed that officials discussed rate rises of more than 25 basis points.
- The General Assembly of the United Nations voted on Thursday to exclude Russia from the UN Human Rights Council.
DXY fundamental forecast
The dollar continued its steady uptrend on Friday, hitting a fresh near-two-year high against a basket of peers and a one-month high against the euro, bolstered by expectations of a faster pace of Federal Reserve interest rate rises.
Hawkish Fed
The Fed’s March meeting minutes were released this week, revealing that several members were prepared to hike interest rates by 50 basis points but decided on 25 due to uncertainties surrounding the Ukraine conflict.
Members also expect the Fed to begin shedding assets from its nearly $9 trillion balance sheet, with the pace expected to slow to a maximum of $95 billion per month.
According to Treasury yield movements, the market has already priced in strong Fed tightening. According to St. Louis Fed President James Bullard, the central bank is not as far behind the curve in the fight against inflation as it appears.
Russia out of UN council
The withdrawal of Russia from the UN Human Rights Council was supported by 93 of the 175 members.
On Thursday, Ukrainian President Volodymyr Zelensky said that the massacre of citizens in Mariupol, a port city under Russian bombardment, will parallel the “heinous crimes” committed in the Kyiv region. He also warned that the Kremlin might stage scenarios in Mariupol to make it appear as though Ukraine was to blame for the crimes.
In addition, US senators have voted in support of a ban on Russian oil, coal, and gas imports and revocation of Russia’s’most most favored nations status, which would lead to higher tariffs for Moscow.
Key data releases from the US
We have a quiet day on the calendar as we have Final Wholesale Inventories, which have little to no impact.
What’s next?
So far this year, few central banks have matched the Fed’s rate of tightening, and the dollar is looking strong against key currencies like the EUR, GBP, and JPY. As a result, the dollar may be able to catch up with some of the recent spikes in short-term US rates, with the DXY testing 100 soon.
DXY technical analysis: edging near 100
DXY is edging closer to the 100 level during the early UK session. So far, the index has risen 0.14%. The index is now trading at 99.88.
The index is well above its 20-day MA on the daily chart, and the RSI is near the 70 level. A break above 99.93 would open the door to 100.10. If it can cross that level, we’ll see the index touching 100.37.
On the flip side, the next support for the index lies around 99.50. Therefore, we can see a downward movement towards the 99.20 level if the index slips below this level.
