US Dollar holds strong on quiet Monday, cautious market mood

• The US Dollar sees some gains, while markets continue looking for clues on the Fed’s next steps.
• Several Federal Reserve members will speak on Monday afternoon.
• Fed’s Beige Book, S&P figures and Initial Jobless Claims will be closely followed this week.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, is slightly higher at the start of the week, supported by safe-haven flows amid geopolitical tensions. Some Federal Reserve (Fed) members are scheduled to speak later on Monday, and their comments will be closely watched for any clues on the Fed’s monetary policy stance.

Daily digest market movers: US Dollar gains on Middle East tensions and Fed comments

• The US Dollar remains steady, inching up slightly due to escalating geopolitical tensions in the Middle East and supportive comments from Federal Reserve officials.
• However, profit-taking dampens the Greenback’s gains as investors react to positive economic data from China and the government’s stimulus package.
• Economic activity figures in this week’s S&P data on Thursday might shake the USD, as well as those in the Fed’s Beige Book report on Wednesday.
• Markets continue to bet on higher odds of two cuts in what remains of 2024.

DXY technical outlook: DXY momentum might have hit its ceiling

The DXY index is facing resistance at the 200-day Simple Moving Average (SMA). Despite resuming the gains, the momentum may not be enough to conquer it. Both the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) have flattened in positive territory, indicating a pause in buying momentum with the latter still in overbought territory.

As a result, the index may struggle to regain the 200-day SMA and may instead consolidate sideways in the near term.