US Dollar Index (DXY) Holds Steady Amid Tariff Headlines and Fed Focus
The US Dollar Index (DXY), which measures the performance of the US Dollar against six major currencies, remains largely unaffected despite a wave of tariff-related headlines over the weekend. United States (US) President Donald Trump announced 25% tariffs on steel and aluminum imports, impacting all countries exporting these commodities to the US. Additionally, discussions are underway regarding reciprocal tariffs, which would raise US import duties to match those imposed by other trading partners.
Gold Prices Surge to Record Highs
While the US Dollar remains stable, gold prices are soaring to unprecedented levels. The precious metal has surged past $2,900 per ounce, marking fresh all-time highs almost hourly. Gold continues to act as a safe-haven asset, offering protection against the market uncertainties driven by tariff concerns. With potential market turbulence in equities, bonds, and the US Dollar, investors are flocking to gold as a hedge against economic instability.
Economic Calendar: Powell’s Testimony in Focus
Beyond the tariff discussions, traders are gearing up for a calm start to the week on the economic calendar. The primary event to watch is Federal Reserve (Fed) Chair Jerome Powell’s semi-annual testimony before Capitol Hill on Tuesday and Wednesday. Investors will scrutinize Powell’s statements for any indications about the future direction of US monetary policy. The Fed is widely expected to maintain its stance on interest rates, emphasizing a resilient US economy as justification for delaying further rate cuts.
Daily Market Movers: Key Highlights
No concrete timeline or dates were provided for the implementation of reciprocal tariffs or new steel and aluminum tariffs, according to Bloomberg.
The US Treasury is set to auction 3-month and 6-month bills at 16:30 GMT.
Equities remain strong, with major indices trading in the green despite the tariff news.
The CME FedWatch Tool indicates a 93.5% probability that the Fed will keep interest rates unchanged at its next meeting on March 19.
The US 10-year Treasury yield is hovering around 4.49%, rebounding from its yearly low of 4.40% recorded last week.
US Dollar Index Technical Analysis: Key Levels to Watch
Despite ongoing trade tensions, the US Dollar Index (DXY) is holding steady, showing little reaction to tariff concerns. Instead, gold remains the primary beneficiary of the flight to safety. US bond yields have inched higher but not enough to significantly boost the US Dollar. Traders continue to assess the impact of recent tariff announcements before making decisive moves.
Key Resistance Levels:
109.30 – July 14, 2022, high and rising trendline (briefly surpassed last week but failed to hold).
110.79 – September 7, 2022, high (next significant resistance level to break for further upside movement).
Key Support Levels:
107.35 – October 3, 2023, high (strong support, tested multiple times last week).
106.52 – April 16, 2024, high (next downside target if further weakness occurs).
105.98 – June 2024 resistance and 100-day Simple Moving Average (SMA) (major support zone).
Conclusion: What’s Next for the US Dollar?
With gold hitting record highs and Powell’s testimony on the horizon, market participants will closely monitor developments in US monetary policy and tariff negotiations. While the US Dollar Index remains range-bound, any shifts in Federal Reserve policy, bond yields, or tariff implementations could trigger significant market movements. Traders should stay vigilant and prepare for potential volatility in the coming weeks.