DXY's Life After the November Hike The US Federal Reserve hiked interest rates by 75bps, taking US rates to 4.00%
In the accompanying statement, it was stated that "In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."
This indicated that they would slow down the pace of rate increases if the upcoming economic data showed softness (weaker than anticipated). This played to the sentiment of the market, expecting some dovishness from the Feds. The DXY fell almost immediately from 111.33 to a low of 110.50.
However, during the press conference, Chair Powell commented that the terminal rate is likely to be higher than expected (The current expectation is 5.00%). This led to the DXY reversing the downward move, to climb above the 111.78 price level, almost immediately .
The DXY has been climbing steadily today, with the price breaking above the 112.50 resistance level and the previous swing high. Moving forward, the DXY is likely to continue with the trend, climbing toward the next key resistance level of 114 (with an area of hesitation, and possible reversal, around the 113 round number level, as experienced at the end of October 2022)
