Hawkish minutes from the Federal Reserve boosted a strong rebound in the US dollar.
2026-02-19 10:29:03
The US dollar index has entered a consolidation phase after hitting a more than one-week high, currently fluctuating around 97.70. The previously released FOMC meeting minutes were a key factor driving the dollar's rebound.
The meeting minutes revealed a significant divergence of opinion among Federal Reserve officials regarding the future path of interest rates. Some members believed that if inflation falls as expected, there might still be room for further rate cuts.
However, some officials warned that premature easing of policies could threaten the 2% inflation target. This cautious yet divergent wording was interpreted by the market as a possible slowdown in the pace of interest rate cuts in the short term, thus supporting the dollar.
Furthermore, the strong non-farm payroll data released last week for January further weakened market expectations for aggressive easing policies. The increased resilience of the labor market gives the Federal Reserve more time to observe inflation trends.
Geopolitical factors also provided support for the US dollar. Reports indicate that the US military may take action against Iran as early as this weekend. Increased uncertainty in the Middle East has fueled safe-haven demand, further benefiting the US dollar as the global reserve currency.
However, the market still expects the Federal Reserve to have room for at least two more rate cuts before 2026. Previously, slightly moderate US consumer inflation data limited excessive expansion of the dollar bulls.
Investors are now turning their attention to the U.S. PCE price index to be released on Friday. This data, a preferred inflation indicator by the Federal Reserve, may provide new direction for the dollar's movement.
Overall, the US dollar maintained a relatively strong position supported by cautious policies and geopolitical risks, but bulls temporarily chose to consolidate at high levels before the release of key data.
From a technical perspective, the US dollar index continued its rebound on the daily chart, breaking through the previous short-term resistance level and regaining its footing above 97.50. The current trend exhibits a "breakout followed by consolidation" structural characteristic.
On the daily chart, the price has returned above the 20-day moving average, and short-term moving averages are starting to turn upwards, suggesting strengthening rebound momentum. The RSI has risen above 50, indicating that market sentiment has shifted from neutral to bullish, but it has not yet entered overbought territory, suggesting that there is still some upside potential.
The MACD has formed a golden cross near the zero line, and the momentum bars are gradually expanding, providing technical support for the bulls. If it effectively breaks through the 98.00 level, the upside targets may be the 98.40 and 98.80 areas.
The 4-hour chart shows the US dollar index trading within an upward channel. Prices have repeatedly found support near 97.50, indicating a slightly bullish short-term structure. Moving averages are in a bullish alignment, and the MACD remains above the zero line; while momentum has slightly weakened, the overall trend remains unchanged.
If it falls below 97.40, it may test the 97.00 support level; if it holds above 98.00, the rebound is expected to continue.
Overall, the US dollar index has a bullish technical structure, and short-term fluctuations are more likely a consolidation phase within a strong uptrend. Future price movements will depend on PCE data and changes in geopolitical tensions.
Editor's Note:
The core logic behind the current rise in the US dollar lies in "cooling expectations of interest rate cuts + increased demand for safe-haven assets". As long as the Federal Reserve maintains a cautious stance and geopolitical risks do not significantly ease, the US dollar will maintain its relative advantage.
However, if the PCE data unexpectedly falls, reinforcing bets on interest rate cuts, the dollar may face a technical correction risk. Ahead of the key inflation data release, the market may maintain a high-level consolidation pattern.
The meeting minutes revealed a significant divergence of opinion among Federal Reserve officials regarding the future path of interest rates. Some members believed that if inflation falls as expected, there might still be room for further rate cuts.
However, some officials warned that premature easing of policies could threaten the 2% inflation target. This cautious yet divergent wording was interpreted by the market as a possible slowdown in the pace of interest rate cuts in the short term, thus supporting the dollar.
Furthermore, the strong non-farm payroll data released last week for January further weakened market expectations for aggressive easing policies. The increased resilience of the labor market gives the Federal Reserve more time to observe inflation trends.
Geopolitical factors also provided support for the US dollar. Reports indicate that the US military may take action against Iran as early as this weekend. Increased uncertainty in the Middle East has fueled safe-haven demand, further benefiting the US dollar as the global reserve currency.
However, the market still expects the Federal Reserve to have room for at least two more rate cuts before 2026. Previously, slightly moderate US consumer inflation data limited excessive expansion of the dollar bulls.
Investors are now turning their attention to the U.S. PCE price index to be released on Friday. This data, a preferred inflation indicator by the Federal Reserve, may provide new direction for the dollar's movement.
Overall, the US dollar maintained a relatively strong position supported by cautious policies and geopolitical risks, but bulls temporarily chose to consolidate at high levels before the release of key data.
From a technical perspective, the US dollar index continued its rebound on the daily chart, breaking through the previous short-term resistance level and regaining its footing above 97.50. The current trend exhibits a "breakout followed by consolidation" structural characteristic.
On the daily chart, the price has returned above the 20-day moving average, and short-term moving averages are starting to turn upwards, suggesting strengthening rebound momentum. The RSI has risen above 50, indicating that market sentiment has shifted from neutral to bullish, but it has not yet entered overbought territory, suggesting that there is still some upside potential.
The MACD has formed a golden cross near the zero line, and the momentum bars are gradually expanding, providing technical support for the bulls. If it effectively breaks through the 98.00 level, the upside targets may be the 98.40 and 98.80 areas.
The 4-hour chart shows the US dollar index trading within an upward channel. Prices have repeatedly found support near 97.50, indicating a slightly bullish short-term structure. Moving averages are in a bullish alignment, and the MACD remains above the zero line; while momentum has slightly weakened, the overall trend remains unchanged.
If it falls below 97.40, it may test the 97.00 support level; if it holds above 98.00, the rebound is expected to continue.
Overall, the US dollar index has a bullish technical structure, and short-term fluctuations are more likely a consolidation phase within a strong uptrend. Future price movements will depend on PCE data and changes in geopolitical tensions.
Editor's Note:
The core logic behind the current rise in the US dollar lies in "cooling expectations of interest rate cuts + increased demand for safe-haven assets". As long as the Federal Reserve maintains a cautious stance and geopolitical risks do not significantly ease, the US dollar will maintain its relative advantage.
However, if the PCE data unexpectedly falls, reinforcing bets on interest rate cuts, the dollar may face a technical correction risk. Ahead of the key inflation data release, the market may maintain a high-level consolidation pattern.
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