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- The US Dollar Index rises for the third session in a row.
- Geopolitical risks keep the Greenback in demand.
- Fed reiterates commitment to 2025 rate cuts, US yields slip but the Dollar still gains.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against a basket of currencies, is ticking higher on Friday, helped by a wave of geopolitical unease. Despite a retreat in Treasury yields and the Federal Reserve’s (Fed) reaffirmation of its cutting path for 2025, the Greenback gains modest ground. The index attempts to break out of the March low range for the third straight day.
Daily digest market movers: US Dollar holds gains despite lower yields, geopolitical jitters
- Fed rate expectations remain steady, with a strong likelihood that rates will stay unchanged in May and move lower by midyear.
- US 10-year yields retreat, now around 4.20%, moving closer to levels last seen in early March, as investors lean into bonds.
- Fed Governor Christopher Waller supports maintaining the current balance sheet reduction pace, reinforcing the central bank’s steady tightening stance.
- Despite softer yields, the US Dollar gains as investors weigh ongoing global risk events.
- Market participants eye geopolitical hotspots, including ongoing instability in the Middle East and Eastern Europe, which continue to support the Greenback.
Technical analysis: DXY eyes rebound despite bearish signals on moving averages
The US Dollar Index is showing early signs of recovery from its March lows, supported by defensive flows and stable Fed guidance. The Relative Strength Index (RSI) is gradually climbing, while the Moving Average Convergence Divergence (MACD) histogram shows easing downside momentum.
Immediate resistance stands near 104.20, followed by 104.80 and 105.20, while 103.40 serves as nearby support, ahead of 102.90. A bearish crossover between the 20-day and 100-day simple moving averages near 105.00 acts as a potential technical sell signal. However, with sentiment stabilizing, the index looks poised to recover further from its March base.
