US Dollar (DXY) Pares Opening Gains After Rate Hike Expectations Move Higher
US Dollar (DXY) Price, Chart, and Analysis
- The US dollar remains under pressure.
- OPEC+ output cut may keep rates higher for a bit longer.
Recommended by Nick Cawley
Get Your Free USD Forecast
The Organisation of Petroleum Exporting Countries (OPEC) and Saudi Arabia announced a surprise round of oil production cuts over the weekend, sending oil sharply higher. OPEC+ said that production cuts totaling 1.15 million barrels per day would start in May. US Dollar (DXY) Pares Opening Gains After Rate Hike Expectations Move Higher
These cuts are in addition to the 2 million barrels per day of cuts agreed upon last October. US Dollar (DXY) Pares Opening Gains After Rate Hike Expectations Move Higher OPEC+ said the additional cuts were needed to stabilize the oil market. Oil jumped in Asian hours and currently trades just under 6% higher in Europe. US oil failed to break a previous level of horizontal resistance at $81.48 earlier today. If this level is broken, the 200-day moving average at $84.10 will come into focus.
US Oil Daily Price Chart
The decision to cut production will make the task of bringing down headline inflation harder for central bankers around the globe. While headline inflation has been moving lower in the US and Europe, core inflation – ex-energy and food – remains stubbornly high. If headline inflation also pushes higher due to OPEC+’s latest move, interest rates may need to remain higher for longer.
US Dollar (DXY) Pares Opening Gains After Rate Hike Expectations Move Higher The probability of another 25 basis point rate hike at the May FOMC meeting rose higher in Europe and currently stands at just under 57%. US Treasury yields also rose post-OPEC+ announcement with the 2-year UST seven basis points higher at 4.10%, while the 10-year benchmark also rose by seven basis points to 3.54%.
Trade Smarter – Sign up for the DailyFX Newsletter
Receive timely and compelling market commentary from the DailyFX team
Subscribe to Newsletter
For all market-moving data releases and economic events see the real-time DailyFX Calendar.
The US dollar (DXY) is back above 102.00 but is struggling to hold early gains. The longer-term outlook for the greenback remains negative with all three moving averages above the current spot price.
US Dollar (DXY) Pares Opening Gains After Rate Hike Expectations Move Higher The 20-dma is also looking to go below the 50-dma, another negative technical signal. Prior support is seen at 101.34 and 101.08 and this looks likely to hold in the short term.
US Dollar (DXY) Daily Price Chart
Charts via TradingView
What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.