What Next for U.S Dollar Index (DXY)? – 12 April Forecast

ByDawn Pipkin

Apr 12, 2022
  • The U.S dollar index has seen massive bullish trends.
  • The index surged as the U.S bond market rout extended.
  • The market expects a more hawkish stance by Fed in the upcoming months.

The U.S dollar index hiked to its highest mark since 2020 amid accelerated global volatility. That had the currency crossing the crucial resistance zone at $100. Remember, the pair hasn’t surpassed this level for years. DXY gained over 12.30% from the 2020 lowest level.

Bond Retreat Continues

The DXY saw bullish actions as the American bond market retreat continued. The 10-year yield bond climbed to 2.85%, whereas the 5-year and 30-year yields jumped to 2.83 % and 2.84%, respectively. That saw bond yields exploring the highest levels in years.

This bond market performance emerges when Fed reveals a more aggressive approach. Last week’s minutes and comments by Federal officials revealed the bank would employ stiffer measure as inflation dominate the markets.

The published minutes show Federal Reserve plans to extend interest rates hike in the coming months. Some of the anticipated rate increases would be 0.50%. Moreover, the bank hinted at introducing Quantitative Tightening.

Today’s U.S inflation data will present cues about current inflation and expected Fed actions. Meanwhile, Reuters surveyed economists. They expected the numbers would indicate the headline CPI (Consumer Price Index) rose to 8.4% from March’s 7.9%. Also, they expect the core Consumer Price Index to climb to 6.6% from 6.4%.

We will see the highest figures in about 50 years if experts turn out to be accurate. The data will emerge a day following a warning by New York Federal that sentiment within the public gets direr. Inflation may keep growing for now.

The DXY hiked as it soared against its peers. For instance, GBP/USD crashed to the lowest value since 2020. Also, EUR/USD plunged over the past four successive days while USD/JPY surged to the highest zone this year.

U.S Dollar index Prediction

According to the daily price chart, the DXY index saw massive bullishness over the past couple of months. The currency printed an ascending channel.

Moreover, the dollar index climbed past all Moving Averages and approached the channel’s upper side. The momentum indicators continued to rise. Thus, DXY will likely extend the surges as bulls aim the crucial resistance at $101.

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