The US dollar is still stuck in the range with all eyes turning into the Federal Reserve and President Powell
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- The US dollar index is circulating on a large scale after dipping it to a five -day lowest level on Tuesday, about 99.20.
- The headlines of the geopolitical newspapers took over early trading with China and the United States to meet this week in Switzerland, and the conflict of Pakistan and India decreased.
- The US dollar index remains stuck in the range of waiting and vision, as the decision of the Federal Reserve is just around the corner.
the US dollar The index (DXY), which tracks the performance of the US dollar (USD) for six main currencies, is widely traded to the top on Wednesday at about 99.40. This level is a few percentage points from the lowest new level for five days from Tuesday. Meanwhile, traders evaluate news about the progress between China and the United States regarding commercial talks and support for Federal Reserve (FED) Decision of interest rate later on Wednesday.
It is not expected much of this average decision, as the markets are almost fully priced in it feeding You will keep Rates Stable despite pressure from US President Donald Trump to cut it.
On the geopolitical front, tensions erupted between Pakistan and India. Pakistan said it had shot down five Indian planes and took prisoner soldiers in response to Indian military strikes early on Wednesday. The possibility of a war between nuclear armed neighbors should see some safe flows of the resort to bonds or gold, for example, although any additional refuge, at this stage, is canceled through commercial optimism, according to Bloomberg reports.
Daily Digest Market Movers: Nothing new to report Powell
- US Treasury Secretary Scott Beesen and American Trade Representative Jameson Jarir will travel to Switzerland for trade talks with the Chinese delegation, led by Deputy Prime Minister this week. Both parties seek to face the tariff that threatened the bishop of both economists. In this first stage, no trade talks will be held this way, although it instead speaks to cancel the situation, according to Bess on Fox News.
- At 18:00 GMT, the Federal Reserve Average decision will be issued with a joint statement. Expectations are for the Federal Reserve to maintain its policy rate in a range of 4.25 % -4.50 %.
- At 18:30 GMT, Federal Reserve Chairman Powell will take the stage to comment on the last policy price decision and take questions from correspondents in the room.
- The stocks in Europe exceeded and traded near 0.5 % of the losses per day near its closing bell. American stocks work slightly better, as Dow Jones led the increase, by about 0.5 %.
- The CME Fedwatch tool shows the opportunity to reduce the interest rate by the Federal Reserve at the June meeting by 28.3 %. Moreover, the July 30 Resolution sees the chances that the prices be lower than the current levels at 74.2 %.
- US revenues are traded for 10 years about 4.28 %, and they are now fixed after a four -day straight rise.
Technical analysis of the US dollar index: The large break begin to crystallize
The US dollar index (DXY) does not really move or respond to the sudden address and communications from Chinese administrations and the United States in commercial talks scheduled to start on Saturday. The markets are likely to read quickly through the main headlines and behind news that these talks are instead of two desperate parties that join each other to learn how to reduce the effects on the economy. This also shows how the American economic performance may have started to strug American economic data This is confirmed.
On the upper side, the first resistance of the DXY comes at 100.22, which supported the index again in September 2024, with a return to the level of the 100.00 round as a bullish sign. Fixed recovery will be a return to 101.90, which was a pivotal level during December 2023 and again as a base to form the inverted head and shoulder (H&S) during the summer of 2024.
On the other hand, 97.73 support can be tested quickly on any major dumping address. Moreover, gentle technical support comes relatively at 96.94 before considering the lower levels of this new price range. This will be at 95.25 and 94.56, which means its lowest fresh levels that have not been seen since 2022.
US dollar index: daily chart
Common questions among central banks
Central banks have a major mandate is to ensure that there is a price stability in a country or region. Economics are constantly facing inflation or contraction when the prices of some goods and services fluctuate. High prices for the same goods mean inflation, and the continuous reduction of the same goods means shrinkage. The central bank’s mission is to maintain demand for queue by adjusting the policy price. For the largest central banks such as the American Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BOE), the mandate is to maintain inflation approximately 2 %.
The central bank has one important tool at its disposal to obtain inflation higher or less, and this is by changing the standard policy price, known as the interest rate. In the previous moments, the Central Bank will issue a statement of its policy price and provide an additional reason about the reason that remains or changes (cutting or walking). Local banks will adjust their savings rates and their lending rates accordingly, which in turn will make it difficult or easier for people to gain their savings or companies to obtain loans and provide investments in their business. When the central bank raises interest rates significantly, this cash tightening is called. When you cut its standard price, it is called cash reduction.
The central bank is often political independent. Members of the Central Bank Policy Council pass through a series of paintings and sessions before being appointed to the Policy Council seat. Every member of this council is often a specific condemnation of how to control the central bank for inflation and subsequent monetary policy. Members who want a very loose monetary policy, with low cheap lending rates, are called to increase the economy significantly while they are satisfied with a slightly higher vision of inflation than 2 %, “doves”. Members who want to see higher rates to reward savings and the desire to keep lighting on inflation at all times “hawks” will not be rest until inflation is at 2 % or less than 2 %.
Usually, there is a president or president who leads each meeting, who needs to create a consensus between hawks or doves and has a final saying when it is divided into the division of voting to avoid a 50-50 tie about whether the current policy should be modified. The president will often deliver speeches that can be followed directly, as the current monetary position and expectations are connected. The central bank will try to push its monetary policy forward without operating violent fluctuations in prices or shares or currency. All members of the central bank will direct their position towards the markets before the policy meeting occurred. A few days before a policy meeting was held until the new policy is connected, members are prevented from speaking publicly. This is called the obstruction period.
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