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US Dollar Latest: USD Rally Intact - Don't Fight The Fed

US Dollar Latest: USD Rally Intact - Don't Fight The Fed

Nick Cawley, Strategist

USD Price, News and Technical Analysis

  • US dollar rally remains but short-term profit-taking may see prices nudge lower.
  • Monetary policy will continue to Trump trade worries for now.

The DailyFX Q3 Forecasts have just been released and cover all the major asset classes.

USD Rally Nears One-Year High on Fed Confirmation

US Fed Chair Jerome Powell gave the greenback another Tuesday when he confirmed the strength of the US economy and reiterated that interest rates were going higher with two more 0.25% hikes in now painted in for 2018.

At the semi-annual testimony to the Senate Banking Committee, Powell said, "Overall, we see the risk of the economy unexpectedly weakening as roughly balanced with the possibility of the economy growing faster than we currently anticipate.” He added, "The unemployment rate is low and expected to fall further. Americans who want jobs have a good chance of finding them.”

The US dollar continues to push higher post-comments and is nearing highs last seen one-year ago. This latest push confirms that in the short-term markets are responding to, and pricing in, monetary policy and are putting the spectre of trade wars to one side for now. Global trade wars are a negative for both sides and it remains to be seen if the recent escalation of US-China tensions and tariffs plays out, or if US President Trump changes his tune.

Weekly USD Forecast – Trade Wars vs Economic Fundamentals – The Battle Continues

US Dollar Analysis: Fed Chair Powell Likely to Re-Invigorate USD

The daily USD chart shows resistance between 94.93 and 95.20. A break and close above would see DXY traing at levels last seen in July 2017. The market may need to consolidate before making a fresh push higher and any downturns towards 94.00 would create potential buying opportunities, all things being equal.

US Dollar Index (DXY) Daily Price (June 12, 2017 – July 18, 2018)

US Dollar Latest: USD Rally Intact - Don't Fight The Fed

On the weekly chart, the 50% Fibonacci retracement of the January 2017 – February 2018 market move cuts across at 95.87, the next target for US dollar bulls.

US Dollar Index (DXY) Weekly Chart (January 2016 – July 18, 2018)

US Dollar Latest: USD Rally Intact - Don't Fight The Fed

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What’s your opinion on the US dollar? Share your thoughts with us using the comments section at the end of the article or you can contact the author via email at or via Twitter @nickcawley1

--- Written by Nick Cawley, Analyst

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.