US Dollar rallies ahead of next week’s PCE data

Despite dovish comments by Fed’s top official as well as declining US Treasury yields, investors are placing their bets on the easing cycle starting by June. At a solid 104.428, the US Dollar Index (DXY) is now trading at its highest point since mid-February.

Data projections for the start of the Fed’s easing cycle, which most traders and investors believe will take place in June. Chairman Jerome Powell warned the markets that the Fed will not respond hastily to two consecutive months of higher inflation data, but the Fed’s main concern is about seeing higher inflation figures again.

The US economy is resilient, holding up well, with a robust labour market and persistently high inflation. The Personal Consumption Expenditures (PCE) for February will give markets more direction, next week. Despite market expectations for dovish moves, the US Dollar is proving resilient as ongoing increases are observed.

The US economy has generally improved, according to Fed data, with authorities erring on the side of prudence rather than easing too quickly or harshly. The Relative Strength Index (RSI) is sloping positively, suggesting that buyers are still in control and that there may be more upside potential in the near future. The DXY is now trading strongly with steady purchasing momentum.