Is the USD Uptrend Coming to an End, As FED Signals Pausing Hikes?
Skerdian Meta • 1 min read
The USD was showing some signs of weakness during the past week, but was still holding well until Friday. But turned quite bearish on the last day after some surprisingly dovish signals from Jerome Powell’s mouthpiece Mary Daly, who is the President of the San Francisco FED. She indicated that 4.50-5.00% is still the FED top, despite the market trying to price in another hike.
DXY Daily Chart – Can MAs Keep Holding As Support?
Sellers testing the 50 daily SMA
Around the same time, the Ministry of Finance in Japan came in with the hammer, intervening in USD/JPY and sending the pair lower by more than 500 pips. That should have added further to the DXY decline, although we’re more interested in the USD side of the coin.
If the FED will give hints on pausing or stopping with rate hikes then the USD will start having trouble. The USD index DXY has been supported by moving averages on the daily chart and now the price is at the 50 SMA (yellow). Although, other FED members such as FED’s Evans, Bullard, or Harker sounded hawkish this week, nut Daly matters most.
Comments from the Chicago FED President
- Exact stance of policy will depend on outlook and risks
- Economic data has been mixed
- Labor market remains strong
- Seeing signs that some of the unusual strength in labor markets may be waning
- Personal forecast is broadly in line with Fed September projections
There’s no clear signal here but, if anything, the comment about the September projections is in line with what Daly was saying earlier.