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US Dollar Index turns negative on dovish Powell

  • The up move in DXY evaporates following Powell’s speech.
  • Fed’s Powell reiterates policy is not on a pre-set path.
  • US Payrolls surpassed estimates at 312K in December.

DXY’s up move to the 96.60 region, or session highs, is now an ephemeral memory as a consequence of the dovish tone from Chief Powell’s speech at the annual meeting of the American Economic Association.

US Dollar Index bid on data, offered on Powell

The index gave away part of the post-Payrolls gains to the 96.60 region as market participants continue to gauge the speech by Fed’s Jerome Powell.

Powell once again reiterated the Fed’s policy is not on a pre-set path, emphasizing at the same time the positive momentum of data and ruled out any concerns over inflation.

He also noted the markets’ perception of downside risks to economic growth, adding that the Fed will be patient with monetary policy.

Powell said the Fed will act on the current normalization of the balance sheet if conflicts with the Fed’s goals arise.

Well… it was nice until Powell turned up…

US Dollar Index relevant levels

As of writing the index loses 0.02% at 96.27 and a break below 95.99 (100-day SMA) would open the door to 95.82 (low Jan.2) and finally 95.65 (low Jan.1). On the other hand, the next resistance emerges at 96.75 (21-day SMA) followed by 96.95 (high Jan.2) and then 97.54 (high Nov.28 2018).

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