US Dollar Index declines towards 114.00, Fed Powell’s speech hogs limelight

• The DXY is expected to drop to near 114.00 amid a weak buying interest while testing the 114.50 hurdle.
• A lower-than-expected decline in the demand for US Durable Goods has supported the DXY.
• Fed Powell’s speech is likely to remain hawkish amid soaring price pressures.

The US dollar index (DXY) is on the verge of delivering a downside break of the consolidation formed in a narrow range of 114.27-114.10. The DXY is expected to decline towards the round-level support of 114.00 as the asset has failed to sustain above 114.40 after multiple attempts.

Subdued US Durable Goods Orders supported DXY

The DXY rebounded firmly on Tuesday after a lower-than-expected decline in the US Durable Goods Orders data. The decline in demand for Durable Goods landed at 0.2%, lower than the expectations of a decline of 0.4%. As the Fed is sticking to its path of hiking interest rates, a decline in demand for consumer durables cannot be ruled out. So a lower-than-expected reading cheered the DXY investors.

Fed Powell’s speech in focus

Crushing the galloping inflation is the foremost priority of the Federal Reserve (Fed). Therefore, investors should brace for a ‘hawkish’ tone from Fed chair Jerome Powell on interest rates. A roadmap of hiking interest rates for the remaining 2022 is expected to be dictated.

Two monetary policy meetings, scheduled in the first week of November and mid of December, will set the path for the 2023 rate cycle. As the Fed sees interest rates top around 4.6%, bigger rate hikes in 2022 will scale down the scope of jumbo rate hikes in 2023. Although, the Fed will keep the rates higher till it finds a slowdown in price pressures for several months.