US dollar slides despite scoring weekly gains

At the time of writing, the US Dollar Index (DXY) is trading at 106.117, down slightly from its previous peak of 106.35. Still, the index is aimed at hitting its peak of 107.10 on November 1.

With hawkish predictions on the Federal Reserve and tensions in the Middle East potentially driving demand back to the USD, the outlook for the Greenback is still good. The US economy is showing strong growth and ongoing inflation, which prompted the Fed to shift its tone to one that is more hawkish. This caused US Treasury yields to rise, which helped the US Dollar.

Increased strains in the Middle East foster a risk-averse mindset, which impacts international markets. The US Dollar’s upward trend is guaranteed by fundamentals and hawkish remarks from the Federal Reserve. The Federal Reserve may decide to raise interest rates at its next meeting, which would be a significant shift from its earlier plan to decrease rates. It is anticipated that the first rate cut will materialize in September after overcoming the May, June, and July sessions.

Relative Strength Index (RSI) on the daily chart shows a good operating environment but a negative slope, which suggests that a move lower is feasible and indicates bearish momentum.