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The US Dollar (USD) eased mildly on Friday’s European morning after surging overnight due to Federal Reserve Chairman Jerome Powell’s hawkish comments, which caught traders by surprise. The Fed’s Chairman signaled that policymakers are not scared of increasing interest rates further if needed, which goes against the market consensus that the Fed is done hiking and cuts will be soon at hand. The surprise was even more bigger as earlier Atlanta and Richmond Fed President Thomas Barkin delivered very dovish comments. On the front, traders will need to assess the words of Powell before heading into the weekend. With only one Fed speaker still to come, the focal point on Friday will be the preliminary Michigan Consumer Sentiment Index and the Consumer Inflation Expectations. Should those decline further, the US (DXY) could be seen squaring back its gains from late Thursday evening and close this week off flat or with a small profit.
Daily digest: US Dollar has Powell to thank for
US Dollar Index technical analysis: US Dollar gets a brief kick-startThe US Dollar got a boost from the hawkish comments from Fed’s Powell. However, the boost starts to fade quite quickly on Friday’s European trading. It looks like the King Dollar, tracked by the DXY Index, is not able to make a comeback, which means more downside could be in the cards. The DXY was looking for support near 105.00 and has been able to bounce ahead of it earlier this week. Any shock events in global markets could spark a sudden turnaround and favor safe-haven flows into the US Dollar. A rebound first to 105.85 would make sense, a pivotal level from March 2023. A break above could mean a revisit to near 107.00 and recent peaks printed there.On the downside, 105.10 is still acting as a line in the sand. Once the DXY slides back below that, a big air pocket opens up with only 104.00 as the first big level, where the 100-day Simple Moving Average (SMA) can bring some support. Just beneath that, near 103.50, the 200-day SMA should provide similar underpinning. More By This Author: