Dollar gains ground after Powell comments

Forex Trade Ideas

DOLLAR INDEX is trading up 0.21% at 98.6836

The dollar strengthened against a basket of major currencies on Monday, in the wake of comments from U.S. Federal Reserve Chair Jerome Powell that opened the door for the central bank to take a more aggressive monetary policy path.

The greenback had been fluctuating between slight gains and losses earlier in the day, and weakened slightly after comments from Atlanta Federal Reserve Bank President Raphael Bostic. The policymaker said he sees six rate hikes this year and two for 2023, a more dovish stance than most of his colleagues as he has concerns about the effects of the conflict between Russia and Ukraine on the U.S. economy.

But the dollar gained ground after Powell said the central bank must move “expeditiously” to bring too-high inflation under control, and will, if needed, use bigger-than-usual interest rate hikes to do so.

Markets have been volatile over the past month as the situation in Ukraine has escalated, increasing the prices of commodities such as oil and putting upward pressure on already high inflation.

The Fed raised its key interest rate by 25 basis points last week for the first time since 2018 as it attempts to combat rising prices while trying to avoid a policy error which could send the U.S. economy into recession. Investors are now focused on the potential speed and size of future rate hikes.

The dollar index rose 0.123%, with the euro down 0.24% to $1.1022.

On technical fronts DOLLAR INDEX RSI stood at 43.97 and currently it is trading above all MA. So, BUY position can be taken with following target and stoploss:

TRADE SIGNAL – : DOLLAR INDEX – BUY: 98.63, TARGET: 99.11, STOP LOSS : 98.22

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