US Dollar Looks to Break Above 103.7 Ahead of Fed Decision - Key Levels to Watch
The Fed's monetary policy meeting this week is being closely watched by global markets as macroeconomic data keeps undermining the need for the US central bank to start lowering rates in the first semester of the year already.
Meanwhile, geopolitical risks remain at a high, bringing more volatility to currency markets.
But despite the backdrop, the dollar index remained stable last week, maintaining the positive trajectory since the beginning of the year.
The dollar traded cautiously against six major currencies, with downward pressure easing slightly after US GDP data for the fourth quarter surpassed expectations at 3.3%.
The market remains vigilant for signals from the upcoming Fed meeting on Wednesday, with sustaining resistance in the dollar index at an average of 103.7.
Supported by robust US growth data and positive economic indicators, the greenback continues to demonstrate strong performance against currencies of developed nations in the first month of the year.
While the Fed's current outlook is reassuring, there is a growing consensus that there will be no rush for expected interest rate cuts, challenging recent market expectations.
Market commentators highlight potential factors strengthening the dollar's trend, including the chance of deviating from the Fed's 2% inflation target due to a thriving economy and the bank's commitment to maintaining a tight monetary policy.
Conversely, any signs of a deteriorating economic outlook in other developed markets could further bolster the dollar, as higher interest rates pose a greater risk of recession for these regions compared to the current situation.
From a technical standpoint, the DXY has been testing a resistance line around 103.7 since last week as part of its
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