US Dollar Update: US Rate Hikes Paused, Markets Challenge the Fed’s View
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US Dollar (DXY) Price, Chart, and Analysis
- Summary of Economic Suggestions (SEP) see terminal rate raised by 50 basis points.
- Markets push back against the Federal Reserve.
The Fed may hike interest rates by another half-a-point to 550-575 basis points. according to the latest SEP dot plot, as chair Powell continues his battle with elevated, and sticky, price pressures. The midpoint of the target range was raised from 5.1% to 5.6% for 2023…
…while projections for this year’s PCE inflation were also raised compared to the last SEP.
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While the Fed is signaling its willingness to hike rated by 50bps – data dependent - the market is suggesting that the US central bank will only lift rates by 25 basis points this year before embarking on a rate cutting cycle in 2024.
The US dollar picked up a small bid post-FOMC but this has now been given back as the Euro nudges higher after the European Central Bank (ECB) hiked interest rates by another quarter-of-a-point today. The Euro makes up nearly 2/3 of the US dollar basket. The US dollar is stuck in a sideways, wave pattern and is currently wedged between the 20- and 50-day simple moving averages, adding to the market’s indecision. Volatility, measured by the ATR (bottom of the chart) remains at, or very close to, multi-month lows.
US Dollar (DXY) Daily Price Chart – June 15, 2023
Chart via TradingView
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