The US Dollar Index (DXY) is trading near a 19-month high of 103.24, supported by accelerating US inflation and hawkish Federal Reserve rhetoric. With the market pricing in only 28bp for the December meeting, analysts see further upside potential as the index maintains a bullish breakout above the 20-day EMA of 102.17.
Bullish
🤖 75%
The Dollar Index sits near its 19-month high of 103.24 after a decisive Bullish Flag breakout, supported by a US CPI beat and hawkish Fed rhetoric, with Waller putting a 50bp December move on the radar. ING sees upside risks for the dollar in the coming days since December pricing at only 28bp leaves room for hawkish repricing. A rates-driven move and RSI at 65.16 (not overbought) suggest momentum can extend toward 104.00.
Catalysts
- ▲ Bullish Flag breakout holding above the 20-day EMA at 102.17
- ▲ Fed's Chris Waller putting a 50bp December rate move on the radar
Risk Factors
- ▼ Price is shy of overbought with RSI at 65.16, so momentum could stall near the 104.00 hurdle
- ▼ A pullback to support at the 20-day EMA at 102.17 or channel floor near 100.81 would negate the setup