US Dollar consolidates ahead of Fed Chairman Powell’s speech

• The US Dollar trades fairly flat for a second day in a row this week.
• All eyes are on Fed Chairman Jerome Powell heading to Capitol Hill. 
• The US Dollar Index (DXY) is trading sideways above 108.00

The US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies, is broadly flat and still resides above 108.00. The Greenback looks to be immune to US President Donald Trump's tariff talks. While China silently slapped some minor tariffs on US goods in a tit-for-tat move on Monday, Trump introduced a 15% levy on steel and aluminum for all countries importing that will come into effect on March 12. 

The economic calendar this Tuesday is being taken over by the Federal Reserve (Fed). Besides Fed Chairman Jerome Powell testifying before Congress, three Fed speakers are due to make an appearance. Traders will want to hear if the central bank has plans for any changes in its monetary policy soon.  

Daily digest market movers: A snooze fest

• At 11:00 GMT, The National Federation of Independent Business (NFIB) has released its Business Optimism Index for January. The number came in at 102.8, below the 104.6 estimate and down from 105.1 in the December reading.
• Fed Chairman Jerome Powell will keep his semiannual testimony before Congress at 15:00 GMT.
• More Fed speakers are lined out to speak throughout the day:
  • At 13:50 GMT, President of the Federal Reserve Bank of Cleveland Beth Hammack will talk at the 2025 Economic Outlook Conference at the Central Bank Center.
  • At 20:30 GMT, Federal Reserve Governor Michelle Bowman speaks at the Iowa Bankers Association Bank Management and Policy Conference in Des Moines.
  • At 20:30 GMT, Federal Reserve Bank of New York President John Williams also delivers keynote remarks at the CBIA Economic Summit and Outlook 2025, organized by the Connecticut Business and Industry Association (CBIA) in Connecticut.
• Equities are struggling this Tuesday with the tariff hangover starting to weigh on them. All major European and US indices are in the red, though less than 0.5%.
• The CME FedWatch tool projects a 93.5% chance that the Fed will keep interest rates unchanged at its next meeting on March 19. 
• The US 10-year yield is trading around 4.51%, ticking up further for a second day in a row and recovering further from its fresh yearly low of 4.40% printed last week. 

US Dollar Index Technical Analysis: Tailrisk from Powell

The US Dollar Index (DXY) is really turning into a snooze fest this week. No real movement in the Greenback as of yet, despite plenty of headlines. Though US yields are the asset to monitor, with Powell’s testimony ahead, things might start to move from now. 

On the upside, the first barrier at 109.30 (July 14, 2022, high and rising trendline) was briefly surpassed but did not hold last week. Once that level is reclaimed, the next level to hit before advancing further remains at 110.79 (September 7, 2022, high). 

On the downside,  107.35 (October 3, 2023, high) is still acting as strong support after several tests last week. In case more downside occurs, look for 106.52 (April 16, 2024, high), 106.14  (100-day Simple Moving Average), or even 105.89 (resistance in June 2024) as better support levels. 

US Dollar Index: Daily Chart