The dollar and its DXY index fell sharply on Wednesday after Fed chief Jerome Powell cooled bulls’ excessive expectations of the dollar. Speaking at the Brookings Institution in Washington, Powell said that the US central bank may slow down the pace of interest rate hikes as early as December. In his opinion, slowing down at this stage is a good way to balance the risks. He also said the Fed has already been “pretty aggressive” with its rate hikes and will not try to bring down the economy with further sharp increases just to get price increases under control faster. Now the probability of 50 basis points hike in December is estimated by market participants at 80%, according to CME Group.
As we noted in our Fundamental Analysis today, “the 105.00 support level on the DXY chart is still standing and resisting a breakdown, and economists say the 105.00 level should keep the DXY dollar index from falling deeper.”
From a technical point of view, the DXY dollar index (CFD #USDX in the MT4 trading terminal) found support at a strong and important level of 105.65. Growth into the zone above the resistance levels of 107.25, 107.82 will be a signal for the resumption of the upward dynamics of DXY.
And today, market participants will pay attention to the publication (between 13:30 and 15:00 GMT) of a whole block of important macro statistics for the United States (for more details, see the Major economic events of the week 11/28/2022 – 12/04/2022). If it turns out to be positive, it will give dollar buyers a chance to “take a breath”. In the meantime, the dollar remains under pressure, also waiting for the publication on Friday of the official report on the US labor market for November.
Support levels: 105.65, 105.00, 104.60
Resistance levels: 107.25, 107.82, 108.00, 109.00, 109.25, 110.00, 111.00, 113.00