DXY: the dollar continues to dominate the foreign exchange market


The dollar index ends the last week of the month, quarter, half year on a positive note, with another increase of 1% and in close proximity to the 105.00 mark.

Market participants are waiting for further strengthening of the dollar and the growth of its DXY index, given the Fed's monetary policy, the most stringent (at the moment) in comparison with other major world central banks.

As New York Fed President Williams and Cleveland Fed President Loretta Mester said last week, "it's smart to go to 3.5% - 4.0% of the federal funds rate" this year and then to 3.5% - 4.0% next year, and "monetary policy will need to act more decisively to get inflation back on target." According to Williams, "a 75 bp rate change was the right thing to do" and the Fed's July meeting will discuss whether to raise by 50 or 75 bp.

In fact, in their statements they echo the recent statements of the head of the Fed, Jerome Powell. So, speaking (also last week) at the ECB Central Banks Forum, he said that the biggest risk for the Fed now is “failure to restore price stability”, and the Fed needs to act more decisively in this regard.


The dollar continues to dominate the foreign exchange market, having also started a new month, quarter, half year on a positive note. At the same time, the DXY dollar index, which evaluates the value of the dollar against a basket of 6 currencies, remains in close proximity to the 105.00 mark. At the time of publication of this article, DXY futures are traded near the 104.74 mark, also slightly below the recent local highs of 105.06, 105.56. Judging by the daily DXY chart, the conditional spring is being compressed more and more, and, as is known from technical analysis, the “triangle” figure is, as a rule, a trend continuation pattern. Therefore, it is logical to assume that the breakdown of its upper border, passing through the 105.56 mark, will become a signal for building up long positions in DXY futures with the prospect of growth towards multi-year highs of 121.29 and 129.05, reached, respectively, in June 2001 and November 1985.