The US Dollar made a bullish turnaround in March, but on Wednesday we saw a 1.5 cent decline after the FED statement and Powell’s comments, which looked like the beginning of another bearish period for the Buck. But, on Thursday we saw a strong bearish reversal which continued today, sending the USD index DXY toward 105 points and breaking above the resistance.

After a week marked by significant events such as central bank announcements, today’s market activity has notably calmed down, however, the USD has continued to move higher. The dollar, which experienced a rally yesterday and continued to maintain its strength for most of the day today as well, advancing against all major currencies except the JPY and the CHF, as markets digest the sudden BOJ and SNB rate moves this week.

So it seems like the market overreacted after the FOMC meeting and the market’s response in the last two days seems to suggest a sentiment of reconsideration, with the acknowledgment that there may have been an overreaction initially. Yesterday, the dollar rebounded strongly in trading, completely reversing the decline observed on Wednesday.

Moreover, USD pairs are facing significant technical levels on the larger charts, indicating a potential shift in market dynamics. This reversal in the dollar’s fortunes highlights the importance of closely monitoring market sentiment and technical indicators in the aftermath of this week’s major events. Traders and investors should remain vigilant as the market continues to reassess its initial reactions and navigate potential shifts in momentum.

USD Index DXY Chart Daily – The 200 SMA Has Been Broken

This ongoing strength in the dollar has prompted some major technical questions to arise, as previously outlined. The relative stability in the markets today suggests a momentary pause in the volatility that characterized the previous days. However, the continued strength of the dollar against most major currencies, coupled with the unresolved technical questions, requires us to remain vigilant early next week to see if these levels will be broken, which would confirm the bullish trend.

Overall, the price action in the USD index DXY and most USD crosses suggests a similar sentiment prevailing across the board. Despite experiencing initial setbacks, the dollar appears poised to potentially make further gains in trading next week, especially after the break of moving averages on the daily chart for the DXY index.

USD Index DXY Live Chart

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