Image Source: Pixabay
 

The dollar index, which is little changed in the European trading, trades with a bullish bias for the session due to the surge to the highest levels this year as the Fed chair Powell gave a hawkish outlook on monetary policy, surprising market participants and soared the price of the greenback higher with about 1.2% in Tuesday’s session.

Interest rates might rise at a higher pace as markets expected, depending on the upcoming economic data for stronger points may lead stock markets to drop with the prices of commodities such as Gold or Crude oil while geopolitical tension should be a soaring factor for oil.

According to the CME’s FedWatch tool, the market priced a 70% chance of a 50 bps into the markets, giving the market reason to lift to multi-month highs against the major currencies due also to the rate hike gap between other main central banks.

There is a 57% chance to hike toward 5.50% or 5.75% as the peak interest rate level.

The daily interval of the dollar index soared towards the decade’s upper-value extreme which may serve as resistance or reason for technical long liquidations which eventually lead the market to pull back and reverse from the mentioned highs.

The intraday perspective trades with an imbalance to the downside while balanced as traders seemingly lean on the extreme of the developing value area. Any rise in the greenback might lead equities and commodities to continue the current downside rotations.

Caution beware of the Jobs opening data as traders monitor how strong the economic data may impact the path of interest rate hikes. Stronger data may be bullish for the dollar in this particular instance.

Intern calculations for the dollar index may point to the downside and could give support for stock markets and commodities in today’s session. 

More By This Author:

Potential Higher Interest Rate Hike Pace Let Markets Drop
Durable Goods Lower-Than-Expected Boosting US Stock Markets
Copper Balanced By Hawkish Central Banks And Supply Concerns