US Dollar edges up as Durable Goods data supports bullish case
- The DXY trades near the 104.30 area after a modest upward reaction to economic data.
- Traders weigh durable goods strength and fresh copper tariff comments against geopolitical ceasefire noise.
- Resistance aligns near 104.53, while 104.09 acts as short-term support.
The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of currencies, is holding near the 104.30 zone during Wednesday’s session. A better than expected print in February’s Durable Goods Orders, coupled with hawkish rhetoric from Fed officials, is helping the Greenback edge higher. However, momentum indicators remain conflicted, hinting at a still fragile upside.
Daily digest market movers: US Dollar steadies as data, Fed comments offset risk sentiment shift
- The Greenback benefits from stronger than forecast US Durable Goods Orders for February, which also saw prior data revised upward.
- US President Donald Trump announced copper tariffs will arrive sooner than markets projected, aiding USD traction.
- A potential ceasefire in the Black Sea between Ukraine and Russia created early downside for the DXY, but peace talks face major hurdles.
- Russia’s demands to lift all sanctions on agriculture and banking in exchange for ceasefire compliance cloud optimism.
- Fed’s Neel Kashkari reiterated that inflation progress remains incomplete, reinforcing expectations for prolonged restrictive policy.
- Traders remain sensitive to PCE data this week amid rising uncertainty about the rate path.
- Market participants cautiously assess tariff headlines and geopolitical signals, balancing risk appetite against Fed tightening signals.
DXY technical analysis: Mildly bullish tone pervades market
The US Dollar Index shows a mildly bullish tone in Wednesday’s session, trading within the 104.18–104.46 range. While the Moving Average Convergence Divergence (MACD) prints a slight buy signal, broader pressure remains bearish as the 20-day, 100-day, and 200-day Simple Moving Averages (SMAs) all signal selling.
The 30-day Exponential Moving Average (EMA) and SMA continue to act as upper barriers. The Relative Strength Index (RSI) appears neutral when paired with the stochastic, though short-term momentum remains weak. Key resistance lies at 104.43, 104.47 and 104.53, while immediate supports sit at 104.09 and 103.84.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.