- The US Dollar remains subdued as the Nasdaq tumbles 3.3% ahead of the market open.
- Fed Chairman Powell stated on Friday that the central bank sees no immediate need for action.
- The US Dollar Index holds at 103.50 as traders express concerns over the Greenback's stability.
The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, remains stable around 103.75 despite ongoing market turbulence. While US equities decline, traders are digesting recent comments from President Donald Trump, who, in a Fox News interview over the weekend, described the US economy as being in a “transition period” that may bring short-term challenges. Investors are increasingly questioning whether the US economy is already in a recession.
This week’s primary economic event is the release of the February Consumer Price Index (CPI) data on Wednesday. Aside from that, the Federal Reserve (Fed) enters its blackout period ahead of the March 19 policy meeting, limiting central bank commentary.
On Friday, Fed Chairman Jerome Powell reassured investors that there is no immediate need for policy adjustments, emphasizing the importance of monitoring incoming economic data. Powell acknowledged rising uncertainties but maintained that the Fed would proceed cautiously rather than rush to alter interest rates.
Market Movers: US Equities Correct Sharply
- A calm start to the week sees a quiet economic calendar, with the US Treasury set to auction 3-month and 6-month bills at 15:30 GMT.
- During a weekend interview with Fox News, President Trump reiterated his focus on tariffs and federal job cuts, referring to the economy’s adjustment phase as a “period of transition,” Bloomberg reports.
- Former Bank of Canada (BoC) and Bank of England (BoE) Governor Mark Carney has been elected Canada’s new Prime Minister, vowing to challenge President Trump’s trade policies, according to CNN.
- US equities opened lower on Monday, with the Nasdaq leading the sell-off, down 3.3%.
- The CME FedWatch Tool projects a 63% probability of the Fed maintaining interest rates within the 4.25%-4.50% range in May, with an 85.8% likelihood of rate cuts by June.
- The US 10-year Treasury yield hovers around 4.20%, rebounding slightly from last week’s five-month low of 4.10%.
US Dollar Index Technical Outlook: Key Levels to Watch
The US Dollar Index (DXY) remains under pressure as markets assess Trump’s economic policies. Investors are closely watching whether upcoming CPI data will show an inflation resurgence, potentially amplifying recession fears.
- Upside Resistance: A move toward 104.00 could face strong rejection, but a breakout may trigger a rally toward the 105.00 level, aligning with the 200-day Simple Moving Average (SMA) at 105.03. Further resistance levels include 105.53 and 105.89.
- Downside Support: If US yields decline further, the 103.00 level may act as support, with a potential drop toward 101.90 if markets continue unwinding long-term USD positions.
As traders brace for key inflation data, market sentiment remains cautious, with the US Dollar’s trajectory hinging on economic indicators and evolving policy decisions.
