Key Points:
- USDX rises 0.21% to 104.01 after its strongest daily performance in three weeks.
- Fed holds rates, signals two cuts later in the year, but warns against premature easing.
- USD/JPY climbs to 149.40 as the yen weakens post-BOJ rate decision.
USDX Gains Momentum as Fed Holds Rates, Signals Caution
The U.S. dollar index (USDX) climbed to 104.01, extending its 0.36% rally from Thursday, following the Federal Reserve’s decision to keep interest rates steady while signaling no urgency to cut rates.
This marked the greenback’s best single-day performance in three weeks, as markets recalibrated expectations amid Trump’s aggressive trade tariff policies and the Fed’s cautious economic outlook.
Fed Chair Jerome Powell reaffirmed that policymakers are “not in any hurry to move” on rate cuts, citing heightened economic uncertainty from trade tensions and the need to monitor incoming data. The Fed’s updated projections maintained two quarter-point rate cuts for later this year, aligning with previous forecasts. However, with reciprocal tariff announcements expected on April 2, investors are adjusting their positioning in the FX and bond markets to hedge against potential volatility.
Technical Analysis
The US Dollar Index (USDX) shows a strong bullish momentum, climbing from a recent low of 102.964 to a session high of 103.779. The chart reflects an uptrend, with price action consistently riding above the moving averages (MA 5,10,30), suggesting sustained buying pressure. The MACD indicator also shows a bullish crossover, confirming positive momentum.
Picture: USDX rally nears key resistance at 103.800, as seen on the VT Markets app
Key resistance levels are forming around 103.800, which is acting as a ceiling for further gains. A decisive break above this level could push USDX toward 104.000 and beyond. On the downside, support near 103.400 could prevent deeper pullbacks. Traders should watch for a breakout or potential consolidation as the market assesses economic data and Federal Reserve policy cues.
If tariff concerns escalate and the Fed remains firm on delaying rate cuts, the dollar could extend gains toward 104.50. However, any signs of economic slowdown or weaker inflation data could cap upside momentum, prompting a retracement toward 103.40.
For now, dollar bulls remain in control, as the USDX holds above key support levels, reinforcing near-term strength in the greenback.
