We started 2024 with a greenback surge after coming under pressure in the second half of 2023.
Yet, it’s been a back-and-forth run for traders as they try to digest and predict the Fed (FOMC) decision in the upcoming months. If borrowing costs continue to rise, you can expect the USD index to test last year’s highs and continue.
In early December, we saw intense USD selling pressure as traders digested lower inflationary data. This in turn supported the easing of interest rates in 2024.
Conversely, these expectations have moderated the last few weeks as the inflationary data does not look as hopeful as before.
Although the odds that the FOMC will start its rate-cutting cycle in March are quickly fading. This provides a short-term bullish greenback push forward.
Accordingly, Wall Street’s outlook remains mixed as the overall strength of the US economy seems to be at around a 50% reading of Bulls and Bears.
Monday’s start to the third week of the year will unfold a slew of economic reports and announcements from all the major markets that should provide vital information as to the financial state of the Global financial market. Hence, we shall wait and see if the greenback surge will continue.
ForexSignal Trading Desk