Dollar Slips Despite Hawkish FOMC Developments
Hawkish Dissent at FOMC
The US Dollar is seeing muted price action over early European trading on Thursday. This comes despite a hawkish shift from the Fed last night at the April FOMC. The Fed held rates unchanged as expected, but the voting split shifted to 8-4, the most divided policymakers have been since 1992. With three members now voting against the ‘easing bias in the statement’, hawkish risks are clearly growing within the Fed. Beyond that, however, the meeting was largely as expected with Powell warning about price risks in both directions, refraining from any clear policy signal. However, news that Powell intends to stay on at the Fed until his criminal investigation is ‘truly over’ was seen as a headwind for any of incoming Fed chairman Kevin Warsh’s dovish intentions.
US/Iran Tensions Rising Again
Despite the clear hawkish developments at the meeting, DXY has been lower today likely as a result of end of month rebalancing rather than any fresh optimism over US/Iran talks. Yesterday, the US rejected Iran’s peace proposal with Trump reportedly being briefed on US military options. Oil prices were seen rising firmly higher yesterday and should tensions remain elevated, USD is likely to start pushing higher again on renewed safe-haven demand near-term.
Technical Views
DXY
For now, DXY remains hemmed in between the 98.24 and 99.15 levels with momentum studies flattening accordingly. While still above the broken long-term bear channel, focus is on a fresh move higher with 100.36 the next objective if we get back above local resistance. To the downside, 96.63 is the deeper support to watch.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% and 74% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.