Bullish Sentiment Holds Firm on Dollar Index Amid Fed’s Expected Hawkish Stance

The dollar index continues its upward trajectory, reaching a two-week high on Wednesday. This surge is fueled by optimistic sentiments regarding the Federal Reserve’s forthcoming monetary policy decision. The central bank’s anticipated maintenance of its hawkish stance is bolstering the dollar’s position.

It’s widely anticipated that the Fed will maintain its current policy stance, keeping interest rates at elevated levels for an extended period. This decision is poised to create a conducive environment for the dollar to thrive.

Recent robust economic indicators from the United States underscore the resilience of the economy, suggesting its ability to withstand increased borrowing costs. Meanwhile, persistent inflationary pressures are likely to impede the anticipated rate cuts, further enhancing the positive outlook for the dollar based on fundamental factors.

The technical outlook also augurs well for the dollar index. The ongoing upward momentum, which commenced from the March 13 low of 102.26, has persisted for five consecutive days. Tuesday’s close above the thickening daily Ichimoku cloud generated a bullish signal. Today, the index breached the 200-day moving average (103.47) and the 50% retracement level of the recent range (103.55), marking a significant milestone. A sustained move beyond these levels is expected to fortify the short-term structure and pave the way for exploration above the next key resistance at 103.86 (61.8% Fibonacci level).

Nevertheless, cautious optimism is warranted. Despite the positive indicators, the 14-day momentum remains in negative territory, and the stochastic oscillator signals overbought conditions. However, as long as the price remains above the daily cloud top and the 200-day moving average, near-term bullish sentiment is expected to prevail.

Res: 103.86; 104.25; 104.85; 105.47

Sup: 103.47; 103.38; 103.25; 102.96