US Dollar Talking Points
The recent rally in the US Dollar[1] appears to be undeterred by the Federal Reserve interest rate decision as the DXY index pushes above a critical technical resistance barrier[2], and fresh data prints coming out of the US economy may keep the Greenback afloat as employment is expected to increase for the third consecutive month.
Fundamental Forecast for US Dollar: Bullish
The US Dollar Index (DXY) trades above the 200-Day SMA (92.56) for the first time since May 2020 as longer-dated US Treasury yields hold above pre-pandemic levels, and the update to the Non-Farm Payrolls (NFP[3]) report may spark a bullish reaction in the Greenback as the US economy is projected to add 500K jobs in March.
At the same time, the Unemployment Rate is expected to narrow to 6.1% from 6.2%, and the ongoing improvement in the labor market may encourage the Federal Reserve to further upgrade its economic outlook even as Chairman Jerome Powell[4] endorses a dovish forward guidance in front of US lawmakers.
Vice-Chair Richard Clarida offered a similar tone while speaking at the Institute of International Finance (IIF) Washington Policy Summit as the official emphasized that “employment is still 9.5 million below its pre-pandemic level,” with the permanent voting member on the Federal Open Market Committee[5] (FOMC) reiterating that “we will continue to increase our holdings of Treasury securities by at least $80 billion per month and our holdings of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward our maximum-employment and price-stability goals.”
The slew of dovish remarks suggest the Fed is in no rush to scale back its emergency measures as Chicago Fed President Charles Evans,
