The US Dollar Index Discovers Bids Below 104.00, and the Upside Remains Favored on Risk-Off Sentiment

After a flat opening, the US dollar index (DXY) is currently seeing a sharp decline. Wednesday's inability to surpass the round level barrier of 104.00 weighed on the asset, although a comeback is inevitable. The DXY remained stronger in the prior trading session as the risk-off impetus intensified due to surging global inflation. The European nations reported rising inflation rates, with the United Kingdom reporting an annual rate of 9 percent and the Eurozone HICP settling at 7.5 percent. The DXY was supported by rising fears of a recession in Europe amid high inflationary pressures and the incapacity of corporations to generate jobs.

President of the Philadelphia Fed, Patrick Harker

This year, Federal Reserve (Fed) policymakers advocate a spate of 50 basis point (bps) interest rate hikes. Rising inflationary pressures urge the Fed to do whatever is necessary to stabilize prices. Patrick Harker, president of the Philadelphia Fed Bank, indicated that the Fed should raise interest rates by 50 basis points at its June and July monetary policy meetings. After that, the Fed should adhere to the standard increase of 25 basis points.

This week's weak economic calendar has left the DXY susceptible to risk sentiment. Nevertheless, the Jobless Claims and Home Sales reports will keep investors occupied during the New York session.

Next week's major economic releases include New Home Sales, Durable Goods Orders, FOMC minutes, Initial Jobless Claims, Gross Domestic Product (GDP), Core Personal Consumption Expenditures (PCE), and the Michigan Consumer Sentiment Index (CSI).

Dollar Index Spot