HFM information and reviews
OctaFX information and reviews
XM information and reviews
FXCC information and reviews
FxPro information and reviews
FXCM information and reviews

Are Dollar Bulls Getting Tired?

22 March 2022 Written by Lukman Otunuga  Senior Research Analyst at FXTM Lukman Otunuga

The past few days have been rough for the dollar. It has weakened against most G10 currencies since last Wednesday despite the Federal Reserve raising interest rates for the first time in more than three years. The mighty dollar’s failure to rally on a hawkish Federal Reserve and updated “dot plot” that signalled another 6 rate hikes in 2022 points to signs of exhaustion for bulls. Given how the latest war-related headlines failed to cushion downside losses, bears could be lurking and ready to pounce down the road.

Federal Reserve policymakers project they will increase their benchmark rate to 1.875% by the end of 2022. According to Bloomberg’s world interest rate probability model, markets have priced in 7 rates hikes this year.

The week ahead promises to be eventful for the dollar thanks to speeches from Fed policymakers, ongoing geopolitical developments, and key economic reports. It is also worth keeping a close eye on US President Biden’s meeting with European leaders at a NATO summit in Brussels on Thursday. Before we discuss how these factors and themes could influence the dollar's trajectory, it is worth keeping in mind that March has been a mixed month for the dollar thus far. However, it is a different story year-to-date with the greenback still maintaining some grip on the FX throne.

In regards to the technical picture, the Dollar Index (DXY) may be entering a range on the daily charts with support at 97.80 and resistance at 99.40. Looking at the equally-weighted USD Index, prices are wobbling above major support at 1.1080 on the weekly charts.

The week ahead…

Jerome Powell hijacked the spotlight on Monday afternoon as his hawkish comments injected life into markets. He stated that the Fed will take the “necessary steps” to get inflation down even if it means aggressively raising interest rates. According to a report on Bloomberg, investors are now pricing a more than 50% probability that the Fed will hike interest rates by 0.5 bps in May. Raphael Bostic, president of the Atlanta Fed also made a speech, stating that he supported just five more interest rate increases this year.

On Tuesday, New York Fed President John Williams is scheduled to make a speech. Fed Chair Powell will be back under the spotlight on Wednesday.

Dollar breakdown on the horizon?

Watch this space as the equally-weighted USD Index could be gearing up for a major breakdown. Prices are trading below the 50 and 100 SMA but still above the 200-day SMA while the MACD trades to the downside. A solid breakdown below the 1.1080 support level could encourage a decline towards 1.0950 and 1.0800, respectively. Should 1.1080 prove to be reliable support, a rebound back towards 1.1300 and 1.1360 could be on the cards.


Share: Tweet this or Share on Facebook


Platinum's Ascending Demand and Depleting Reserves: A Golden Opportunity for Traders
Platinum's Ascending Demand and Depleting Reserves: A Golden Opportunity for Traders

When delving into the realm of commodities, the inherent dynamics of supply and demand remain pivotal in dictating price trajectories...

29 Sep 2023

Extended Analysis: The Tumult in Soft Commodities and the Inflationary Maze
Extended Analysis: The Tumult in Soft Commodities and the Inflationary Maze

Soft commodities have inexorably stepped into the spotlight as their soaring prices amplify the labyrinth of global inflation. A spectrum of meteorological adversities and burgeoning...

28 Sep 2023

Continual Dollar Ascendancy: The Underlying Dynamics
Continual Dollar Ascendancy: The Underlying Dynamics

The trajectory of the US dollar is demonstrating an upward momentum, with the dollar index inching closer to the resistance level at 106.00...

28 Sep 2023

Dollar on the Watch: Core PCE Inflation Holds the Key
Dollar on the Watch: Core PCE Inflation Holds the Key

After the Federal Reserve's hawkish stance, all eyes are now on the core Personal Consumption Expenditures (PCE) index, the Fed's preferred gauge of inflation, due to be released on Friday at 12:30 GMT...

26 Sep 2023

AI’s Evolution: Bridging the Real and the Imagined
AI’s Evolution: Bridging the Real and the Imagined

Once merely the musings of speculative fiction, the conception of Artificial Intelligence (AI) autonomously executing tasks and rendering decisions has transformed into tangible reality...

25 Sep 2023

The Fed Rate Decision Bolsters the U.S. Dollar
The Fed Rate Decision Bolsters the U.S. Dollar

The dollar index is currently trading at 105.20. Following the September meeting, the Federal Reserve opted to maintain the rate at 5.5%, aligning with market expectations. In its monetary policy statement...

21 Sep 2023

Editors' Picks

MultiBank Group information and reviews
MultiBank Group
Vantage information and reviews
FP Markets information and reviews
FP Markets
Just2Trade information and reviews
AMarkets information and reviews
IronFX information and reviews

© 2006-2023 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.