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- The USD climbs to a nearly one-month high on Friday amid a combination of supporting factors.
- The Fed’s hawkish pause earlier this week and easing US recession fears underpin the Greenback.
- The USD bulls now look forward to speeches from influential FOMC members for a fresh impetus.
The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, enters a bullish consolidation phase after touching a nearly one-month top, around the 100.85 region during the Asian session on Friday. Nevertheless, the index remains on track to register gains for the third straight week and seems poised to build on its recent recovery from a multi-year trough touched in April.
The Federal Reserve (Fed) Chair Jerome Powell said earlier this week that there is great uncertainty over US trade tariffs and that the right thing to do now is to wait for further clarity. The remarks suggested that the US central bank is not leaning towards cutting interest rates anytime soon. Adding to this, the US-UK trade agreement raises hopes for more such deals with other countries and helps ease concerns that an all-out trade war might trigger a US recession. This, in turn, should continue to act as a tailwind for the US Dollar (USD).
Apart from this, persistent geopolitical risks stemming from the protracted Russia-Ukraine war, the escalation of tensions in the Middle East, and the India-Pakistan border validate the near-term positive outlook for the safe-haven buck. The USD bulls, however, refrain from placing fresh bets and opt to move to the sidelines ahead of speeches from a slew of influential FOMC members later during the North American session. The comments will be scrutinized for cues about the future rate-cut path and provide some impetus to the DXY.
