US Dollar rally is taking a breather – BBH
17.04.2024, 12:17

US Dollar rally is taking a breather – BBH

Analysts at BBH share their near-term outlook for the US Dollar Index (DXY).

Chair Powell and other Fed officials have taken a more hawkish turn

"The dollar rally is taking a breather.  DXY is trading lower for the first time since last Monday near 106.165 after making a new cycle yesterday near 106.517.  It remains on track to test the November 1 high near 107.113."

"The euro is trading higher near $1.0645 but the clean break below $1.0755 sets up a test of the November 1 low near $1.0515.  Elsewhere, sterling is trading higher near $1.2465 after higher-than-expected CPI data.  USD/JPY is trading lower near 154.60 after making a new cycle high near 154.80 yesterday."

"The dollar rally should continue as recent data confirm persistent inflation and robust growth in the U.S.  In turn, Chair Powell and other Fed officials have taken a more hawkish turn.  This should keep upward pressure on U.S. yields, and this is what the Fed wants in lieu of another hike. We believe that while market easing expectations have adjusted violently after CPI and now Powell, there is still room to go.  When the market finally capitulates on the Fed, the dollar should gain further." 

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