The US Dollar Index (DXY) surged to an 11-week high at 104.3, propelled by a robust US jobs report that exceeded market expectations, triggering a revaluation of aggressive Federal Reserve rate cut bets. With Fed Chair Jerome Powell’s cautious stance on rate cuts, citing the need to “give it some time,” the dollar maintained its momentum. Despite uncertainties in global markets, the dollar’s resilience is underscored by rising Treasury yields and strong economic indicators.
Technical
The DXY’s current price at 104.378 signals a potential bullish continuation after breaking the critical 11-week high. Trading comfortably above the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line), the index exhibits positive momentum. The upward-sloping RSI nearing overbought levels suggests a strengthening trend.
Short-term opportunities may emerge with a sustained push above the 11-week high, targeting the 104.547 resistance level. A breakthrough could propel the index to the 104.918 resistance. Conversely, a drop below 104.262 may find immediate support at 103.817, with 103.407 and 102.973 as subsequent levels.
Summary
The US Dollar Index stands at an 11-week pinnacle, supported by strong fundamentals and technical indicators. Bullish continuation would bring the 104.547 into play, with a reversal below 104.262, likely to leave the 103.817 support level within the bears’ reach in the short term.
Sources: TradingView, Trading Economics, Dow Jones Newswire, Reuters.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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