The US dollar falters after Jerome Powell's statements

• Jerome Powell noted that inflation growth had stalled, but was on track to meet the 2% target.
• He also noted that monetary policy needs more time to do its job and that a rate hike is highly unlikely.
• The markets are betting on a rate cut at the end of the year.

The US Dollar Index (DXY) fell to 105.45 on Wednesday following the Federal Reserve's (Fed) decision to keep rates at 5.25%-5.50% and cautious comments from Chairman Jerome Powell.

The US economy, despite facing inflationary pressures and an increasingly tight labor market, maintains solid domestic demand, according to Powell's observations. Although progress is being made, inflation remains high, leading the Fed to be cautious about its future path. For now, investors are giving up hopes for three rate cuts this year and instead delaying the start of the easing cycle until the fourth quarter.

Daily Market Moves Summary: DXY Falls as Markets Digest Powell Comments

• The Federal Reserve (Fed) stressed that progress on inflation has stalled and that they need more confidence to start cutting.
• During the press conference, Jerome Powell acknowledged significant progress toward the Fed's dual goals, but that inflation remains above target, with further progress uncertain.
• He also presented different scenarios where he basically stated that if the data remains strong, they will maintain their monetary policy for longer. If the data gives more confidence to the banks, they will start to cut back.
• However, he basically took the possibility of a rate cut off the table.
• Currently, the probability of a rate cut by the Fed in June and July is low, while the odds for the September meeting have fallen below 55%.

DXY Technical Analysis: DXY Prepares for Bearish Move, Despite Slight Bullish Indicators

On the daily chart, the RSI presents a negative slope although it remains in positive territory, which implies that, despite the buying momentum, the bearish pressure is increasing. The Moving Average Convergence Divergence (MACD) shows flat red bars indicating the possibility of a bearish crossover soon. This signals that the selling force could gain strength in the coming trading sessions.

Furthermore, DXY's position above its simple moving averages (SMA) suggests a slightly bullish tone in the short term. Despite showing a negative near-term outlook, the fact that it remains above the 20-day, 100-day, and 200-day SMAs hints at the undercurrent of bullish forces that could balance the bearish side.

https://www.fxstreet.es/analysis/eur-usd-pronostico-el-proximo-objetivo-al-alza-es-10750-202405011955