- Us Dollar Index (USDInd) up 2% on sticky inflation; CPI hot, PPI flat
- Fed divided, with rising political pressure to cut
- Key resistance: 50-day SMA, with target at 93.452 and higher
- Support: 21-day EMA at 98.036 if bulls fail
- Markets jittery after political pressure on Powell sparks volatility
Did you know that the USDInd is up over 2% since touching its 2022 lows, driven by sticky inflation data and shifting rate expectations?
This week’s CPI and PPI releases painted a picture of persistent inflation pressures. While CPI surprised to the upside, PPI came in flat, sending a clear message to the Federal Reserve: there's no urgency to ease.
Markets are increasingly uneasy over mixed signals from the Fed, with recent minutes showing a divided board. The situation becomes more delicate as political pressure,particularly from former President Trump, builds in favor of rate cuts. Even whispers about removing the Fed Chair have surfaced, injecting more volatility into rate expectations.
Technical outlook: dollar at a crossroads
On the charts, USDInd is testing the 50-day simple moving average after breaking out of a two-month downward channel. Today marks the second straight session this level is acting as resistance.
Momentum remains to the upside, as indicated by the rising slope of the Relative Strength Index (RSI). A firm close above the June 23 swing high at 93.452 could clear the path toward:
- 99.842 - The 61.8% Fibonacci retracement
- 100 .76 - The 78.6% Fibonacci retracement
The fibo level is taken from May 12th high to July 1st lows
For the USDIndex bears, the 50-day SMA remains a critical level. Failure to close above it may pull prices back toward the 21-day EMA at 98.036. A deeper breakdown below that zone could bring 2022 lows back into focus.
Sticky inflation and firm momentum support the dollar, but yesterday's political shockwave serves as a caution flag. Bulls may stay in control, but confidence hinges on how markets digest both data and Fed credibility.