Dollar Pushing Higher On Hawkish Fed Outlook
DXY Bid on Monday
The US Dollar is starting the week on a strong footing with the DXY extending its recent bull run, now on course for a fifth day in the green. The move higher comes against a backdrop of rising uncertainty around the Iran war, feeding into increased safe-haven demand, higher oil prices and hawkish Fed expectations consequently.
Higher Oil Prices
Crude prices were seen breaking out to their highest level in over a month today as fears of a US ground assault in Iran dominate headlines. Trump is reportedly considering taking control of the Kharg island oil site sparking fears that the war will soon escalate. If news of any ground assault does break, USD is likely to move much higher as oil prices explode. For now, traders continue to monitor in coming headlines with Trump insisting that the US and Iran are still negotiating, though this remains unconfirmed by Iran.
Hawkish Fed Expectations
With energy prices remaining elevated, traders are turning increasingly hawkish in the Fed expectations. At the last meeting, the Fed held onto one projected rate-cut this year, down from two prior. However, the market is now pricing out any rate cut this year and plenty of hawkish Fed commentary recently, the view is that the Fed itself will be forced to alter its forecasts soon, keeping USD supported near-term. As such, USD looks likely to continue higher unless we hear news of some breakthrough in peace talks.
Technical Views
DXY
The index is now once again attempting to break above the big 100 level. This has been an important resistance level for the market, capping upside action since last May. If bulls can sustain a breach here, focus will be on 101.17 next with 102.85 above as the higher level to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.