United States Dollar Index weakens despite rising inflation concerns, Fed rate hike bets
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is losing ground for the third consecutive day and trading around 98.80 during Asian hours on Wednesday.
The US Dollar Index is weakening as rising oil prices heighten inflation concerns and increase expectations of a Federal Reserve rate hike. Geopolitical tensions from recent attacks on Iranian tankers have also contributed to the decline. Traders currently price a 60% chance of an interest rate hike at the Fed's upcoming meeting.
The upcoming US Producer Price Index and Consumer Price Index inflation data will be crucial in determining the Federal Reserve's next steps ahead of the September meeting. While some economists believe a rate hike could put a floor under the greenback, they caution against over-interpreting recent data and market moves. The Dollar Index is currently trading at 98.80, with short-term trend capped by descending moving averages and a lingering downside pressure suggested by the 14-day RSI near 38.
Resistance levels are identified at the nine-period EMA and the 50-period EMA, with traders looking to prior swing lows for potential demand zones.
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