The US Dollar (USD) showed signs of recovery on Friday, following a week of volatility, as it found support after Federal Reserve (Fed) Chairman Jerome Powell reassured markets of his position. Despite concerns about political pressure under President-elect Donald Trump’s administration, Powell firmly asserted that the Federal Reserve remains an independent body, with no threat to his role. This statement calmed investors and helped boost the US Dollar index (DXY), which hovered near 104.50 ahead of the final data releases for the week.
Powell Reassures Markets Amid Political Uncertainty
The US Dollar received a boost following the Fed’s decision to lower interest rates by 25 basis points on Thursday, bringing the policy rate to a range of 4.50%-4.75%. While the rate cut initially attracted attention, the real market-moving moment came during Powell’s press conference. When asked whether he feared for his job under the incoming Trump administration, Powell was unequivocal in his response, stating that he could not be fired and reaffirming the Fed’s political independence. His firm stance reassured investors who had been nervous about potential political interference in monetary policy.
Michigan Sentiment Report: A Key Indicator for Consumer Confidence
As the US Dollar seeks to find its footing, attention turns to the University of Michigan’s preliminary consumer sentiment report for November, set for release at 15:00 GMT on Friday. Consumer sentiment is expected to tick up slightly to 71, from 70.5 in October. However, it is the inflation expectations within the report that will be crucial. Analysts have forecasted that inflation will remain a primary concern under the Trump administration, so any indication of rising inflation expectations could have a significant impact on both the US Dollar and broader financial markets.
Also read : US Dollar Index Climbs 0.42% As Consumer Confidence Rises To 73 In November, Outpacing Forecasts
Market Outlook: Will the Dollar Break New Highs?
The US Dollar Index (DXY) has faced some resistance after a strong rally earlier in the week. Despite the pullback, Powell’s comments and the ongoing uncertainty surrounding the US political landscape have kept the dollar supported. Technical analysis points to the first major resistance level for the DXY at 105.53, the high reached in April. If this level is breached, the index could target 106.52, followed by 107.00. On the downside, support is seen around 104.00, with the 200-day Simple Moving Average (SMA) at 103.86 providing a floor for the DXY.
