On Tuesday (February 24), during the early US trading session, the US dollar index surged, driven by comments from Federal Reserve officials, quickly approaching the key 50-day moving average. Goolsby explicitly stated that cutting interest rates prematurely would not be prudent before ensuring inflation steadily falls back to the 2% target. He emphasized that policymakers have paid the price for misjudging inflation as "temporary," and this mistake must not be repeated. This statement directly reduced market bets on rate cuts in March and June, triggering a short-term rally in the dollar.



Several officials warned that inflation remains too high, significantly cooling expectations for interest rate cuts and providing support for a stronger dollar. Goolsby pointed out that a 3% inflation rate still falls short of the Fed's statutory target of 2%, therefore opposing a concentrated, upfront interest rate cut.

As a result, the market's expectation of a rate cut in March has dropped to 4.1%, and the probability of a rate cut in June has also fallen from 50.2% last week to 43.9%. Furthermore, Federal Reserve Governor Waller has previously expressed a similar hawkish stance, believing that if the job market continues to improve, the case for a rate cut will weaken further. The frequent statements from these two officials have built a solid floor for the dollar, allowing it to maintain its strength during this data vacuum period.

Technical Analysis


(US Dollar Index Daily Chart Source: FX678)

The US dollar index is currently testing resistance near its 50-day moving average, with its upward momentum shifting from a sharp rise to a sideways trend at higher levels. Despite a strong performance in the early morning, the index's momentum has weakened after reaching technical resistance levels over the past two hours, exhibiting a clear sideways consolidation pattern. The market is currently repeatedly testing the 50-day moving average (97.941) and the short-term Fibonacci level (97.987). This movement indicates that bulls are cautious before key levels, and the market is digesting earlier positive comments and looking for catalysts for further breakthroughs. If it can effectively hold this level, the dollar may initiate a medium-term trend reversal, targeting the 200-day moving average at 98.394.

From a technical perspective, the focus is on the potential for a rapid upward move after the breakout, while the support zone below remains solid. Looking at the current technical pattern, the 50-day moving average has become the trigger point for the dollar to break upwards and confirm a medium-term reversal. Once the breakout is successful, the upside potential will be fully opened, targeting 98.394 and even the major high of 99.492. Meanwhile, the short-term support levels have moved up to 97.522 and 97.286, with the main support zone remaining between 96.762 and 96.476. Overall, the dollar has essentially found a bottom for the current phase. Unless there is a concerted effort to suppress it in global markets, the dollar is likely to maintain a slightly bullish trend with fluctuations.