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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange]: The US dollar index remains volatile, pay attention to the Federal Reserve's interest rate resolution." Hope it will be helpful to you! The original content is as follows:
On Wednesday, the US dollar index fluctuated slightly, and the Federal Reserve (Fed) will announce its latest interest rate decision on Wednesday. CME's Fed Watch tool shows that market participants generally expect the Fed to maintain current interest rates in the next two meetings, and a 25 basis point cut is expected to be expected at the Federal Open Market aihuaforex.committee (FOMC) meeting in June. This week, FOMC will also release updated interest rate forecasts, which may significantly change rate cut expectations if Fed policymakers’ outlook on interest rates deviate significantly from existing market forecasts.
Analysis of major currencies
United States dollar: As of press time, the US dollar index hovered around 103.30, up 0.07% during the day. Traders responded to Germany’s major fiscal expansion, while focusing on geopolitical risks associated with ongoing negotiations between U.S. President Donald Trump and Russian President Vladimir Putin. As market sentiment shifted, the index rebounded from its earlier decline. In addition, the market expects the Fed to keep interest rates unchanged on Wednesday, with market pricing showing that the central bank's tone and upcoming decisions have little change. Technically, the U.S. dollar index is trying to return to strength, although it is still close to multiple month lows. The Relative Strength Index (RSI) is moving out of the oversold zone, suggesting a potential rebound, while the Moving Average Convergence/Diverage (MACD) histogram continues to show bearish momentum, although downward pressure is easing. Resistance is at 104.20, followed by 104.80 and 105.20, marking key breakthrough levels. Support is 103.40, and if it falls below, it may expose 102.90. Although short-term momentum is recovering, the index is still below its simple 50-day and 200-day moving averages, indicating that there is no sustained bullish trend yet.
1. Trump bans trans soldiers from serving U.S. federal judges order to prevent U.S. District Judge Ana Reyes approved a preliminary injunction request from active trans soldiers and trans people who are applying to enlist. The ruling will temporarily ban Secretary of Defense Pete Hegses and various services from implementing executive orders and follow-up guidance documents signed by President Trump, which prohibits transgender people from serving in the U.S. military. Reyes said in the ruling that the defendant failed to provide a legitimate reason to prohibit all trans service members from serving. Reyes said she will make the ruling effective date temporarilyIt was postponed until March 21 so that the Department of Justice had time to appeal to the District of Columbia Court of Appeals. 2. US Treasury Secretary: Trump demands reflection on sanctions policies that threaten the status of the US dollar.
U.S. Treasury Secretary Bescent said that US President Trump demands reflection on sanctions systems that threaten the status of the US dollar's reserve currency. In an interview with Fox News, Becent said: "President Trump issued an order asking me to reflect on the sanctions system. The sanctions we have been implementing for a long time threaten the dollar's reserve currency status." Becent pointed out that the current U.S. sanctions force people to abandon the use of the dollar, and Washington plans to maximize the impact of the restrictions imposed.
3. Germany will receive huge financial support through its historic spending bill. Germany has adopted a landmark expenditure plan, taking an important step towards releasing hundreds of billions of euros for debt financing for defense and infrastructure, heralding the end of decades of budget tightening. The controversial legislation, driven by conservative Prime Minister-elect Mertz, was passed in the lower house of parliament on Tuesday by 513 of 733 votes, clearing the two-thirds threshold required for constitutional amendment. The bill would largely lift debt restrictions on defense spending, creating a potentially unlimited supply of funds for re-arming to deter Russia. It will also set up a 500 billion euro ($546 billion) fund to invest in the country's aging infrastructure. 3. Economist: Inflation surge in February is expected to adopt hawkish policies
Desjardins Group economist Mendes said that the Bank of Canada is about to embark on a hawkish route due to the worrying inflation report in February. He expects the rate cut cycle to be suspended in the next decision on April 16. In February, inflation unexpectedly accelerated to 2.6%, with key core CPI indicators slightly below 3%. Mendes pointed out that the 36% aihuaforex.component in the consumer price index rose by more than 3%, the highest level in 10 months. Prices may accelerate as the U.S. government appears to inevitably impose high tariffs next month and the Canadian dollar weakening expectations.
Institutional View
1. Analysts: The Federal Reserve is expected to cut interest rates up to twice before the end of the year.
Deborah Cunningham, chief investment officer of Federated Hermes, in charge of global liquidity markets, said in a report that the Federal Reserve will cut interest rates one or two times by the end of this year. She said the next rate cut by the Federal Reserve may be in May, and will cut it a second rate cut near the end of the year if necessary. Cunningham said this reflects ongoing inflation in the United States and the resilience shown by consumers.
2. Saxo Bank: ECB this yearStill rate cuts
Saxo Bank's Jacob Falkenkron said the ECB will still cut interest rates this year, but the planned fiscal stimulus in Europe may eventually lead to inflation, which will affect interest rate outlook. The planned fiscal stimulus is expected to lead to increased internal demand in Europe, which will increase some inflationary pressure. He said the ECB could cut interest rates up to two times this year. The currency market is currently priced by the European Central Bank cut interest rates twice this year.
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