US Dollar Caught in a Triangle: Will Bulls Charge Through or Bears Break Lower?
Analyzing the US dollar index, the daily chart immediately reveals a squeeze following the weakening of the downward momentum.
Despite a strong start to the year, DXY found itself squeezed between 102.3 and 102.6, influenced by recent developments.
Should the short-term triangle formation be breached with daily closes above 102.6, the next hurdle at the 103.2 level becomes the focus.
Conversely, a break in the lower region may initiate a decline, dipping below 102.3 to 101.75 and potentially targeting the 100 regions.
Despite the above-expected inflation data last week, the decline in producer prices confused investors, and this was reflected as a squeeze on the DXY chart.
Consequently, the DXY, having broken its steep accelerated downtrend upwards, failed to sustain its trajectory following mixed data last week and instead entered a sideways movement.
This scenario heightens the likelihood of the dollar continuing its course based on the breach of closely positioned support and resistance levels.
The gold market continues to be driven by expectations of a Fed rate cut and the escalation of tensions in the Middle East.
Two developments on the agenda, one economic and the other geopolitical keep the demand for gold prices alive.
Despite the cautious rhetoric of regional Fed presidents, market investors continue to maintain their view that interest rate cuts may start in March.
This approach shows that the recent statements of Fed members have not yet changed the market's view. As a result, the market continues to keep the Fed under pressure to cut interest rates.
The expectation that the Fed will cut interest rates in March is still high with a probability close to 80%.
The Fed's meeting at the end of the month has become
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