- DXY is trading flat about 104.30 as PCE data provides any new motivation.
- February PCE increased by 0.4 %, while maintaining inflation concerns before facing the April tariff.
- The resistance is located at 104.47, while 103.95 represents support in the short term.
The US dollar index (DXY), which measures the value of the US dollar (USD) against a basket of currencies, is currently flat near 104.30 on Friday after the preferred inflation scale is launched for the Federal Reserve (FED) – PE PECE (PCE). Reading showed a mild rise, helping Greenback to keep modern levels. However, it appears that the gathering is covered while the safe drowns in favor of gold, and technical signals remain down.
Daily Digest Market Movers: The US dollar bears gains after the PCE version, tariff tensions
- The main PCE rose in February 0.4 %, higher than the expected 0.3 %, enhancing continuous inflation concerns in the United States.
- Print the main address PCE by 0.3 %, matching expectations and does not provide any big surprises for traders.
- Despite the strongest data, the US dollar index traded sideways as gold rose to more than $ 3,080 to reach new standards.
- The recent tariff ads from US President Donald Trump, including car tax, rocked 25 % from April 2, global commercial morale.
- European Union officials have warned of a “strong and timely” response if the definitions are carried out as planned next week.
- The European Central Bank Vice President (ECB) Lewis de Gindus said the definitions will have temporary inflationary effects but permanent damage to the growth of the euro area.
- German adviser Olaf Schools criticized the US strategy, saying that isolation will eventually harm all the relevant economies.
- DXY remains in a narrow monotheism where the markets are waiting for more visible directional stimuli after PCE.
- On Thursday, the US GDP was reviewed to 2.4 % for the fourth quarter, a little higher than the initial estimate, but had a little effect on Greenback.
- The unemployed claim data showed an improvement, with continuous claims to 1.856 million, which supports the recitation of the labor market.
- The deadline for the mutual tariff is approaching April 2, raising concerns about a possible trade conflict with the European Union.
Technical analysis
The US dollar index (DXY) continues to trade in monotheism near the 104.30 region after a moderate reaction after PCE. While the average spacing medium rapprochement (MACD) is a purchase sign, the momentum indicators remain mixed. It has a terrible, terrible oscillator, indicating the strength of the defeated trend. The dumping background is supported by simple averages of 20, 100 and 200 days (SMA), as well as the averages of lower movement for 10 and 30 days (EMA), all indicate a decrease. The resistance is located in 104.118, 104.145, and 104.472, while immediate support depends on 103.951.
Common questions among central banks
Central banks have a major mandate is to ensure that there is a price stability in a country or region. Economics are constantly facing inflation or contraction when the prices of some goods and services fluctuate. High prices for the same goods mean inflation, and the continuous reduction of the same goods means shrinkage. The central bank’s mission is to maintain demand for queue by adjusting the policy price. For the largest central banks such as the American Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BOE), the mandate is to maintain inflation approximately 2 %.
The central bank has one important tool at its disposal to obtain inflation higher or less, and this is by changing the standard policy price, known as the interest rate. In the previous moments, the Central Bank will issue a statement of its policy price and provide an additional reason about the reason that remains or changes (cutting or walking). Local banks will adjust their savings rates and their lending rates accordingly, which in turn will make it difficult or easier for people to gain their savings or companies to obtain loans and provide investments in their business. When the central bank raises interest rates significantly, this cash tightening is called. When you cut its standard price, it is called cash reduction.
The central bank is often political independent. Members of the Central Bank Policy Council pass through a series of paintings and sessions before being appointed to the Policy Council seat. Every member of this council is often a specific condemnation of how to control the central bank for inflation and subsequent monetary policy. Members who want a very loose monetary policy, with low cheap lending rates, are called to increase the economy significantly while they are satisfied with a slightly higher vision of inflation than 2 %, “doves”. Members who want to see higher rates to reward savings and the desire to keep lighting on inflation at all times “hawks” will not be rest until inflation is at 2 % or less than 2 %.
Usually, there is a president or president who leads each meeting, who needs to create a consensus between hawks or doves and has a final saying when it is divided into the division of voting to avoid a 50-50 tie about whether the current policy should be modified. The president will often deliver speeches that can be followed directly, as the current monetary position and expectations are connected. The central bank will try to push its monetary policy forward without operating violent fluctuations in prices or shares or currency. All members of the central bank will direct their position towards the markets before the policy meeting occurred. A few days before a policy meeting was held until the new policy is connected, members are prevented from speaking publicly. This is called the obstruction period.
