Dollar Breakout: Hawkish Fed Pricing Fuels Bullish Technical Picture
The US Dollar Index has broken out due to hawkish Fed pricing ahead of next week's FOMC meeting, fueled by escalating geopolitical tensions in the Middle East and rising energy prices.
Data from TradingView shows a strong correlation between the DXY and Fed pricing one year out, with a 0.99 positive correlation over the past five trading days.
The dollar is also attracting renewed safe-haven demand, as evidenced by its strengthening relationship with the MOVE Index, which measures expected volatility in the US Treasury market.
Technical analysis suggests that buying interest has resumed, with the DXY breaking above a downtrend and trading above its 50, 100, and 200-day simple moving averages. The Relative Strength Index (RSI) has also broken its downtrend, while MACD remains in positive territory.