The US dollar index has been showing positive growth recently. It reached its highest level since March this year. This has been the longest winning streak of 8 weeks since 2014. This bullish trend directly results from the sudden increase in the US Treasury yield. In this article by YaMarkets, The Best Trading Platform, we will have an overview of the USD, the technical analysis, economic indicators, and more that could impact the USD prices in this coming month. We will also briefly overview one of the Top Online Trading Platforms, where you can efficiently trade in forex, cryptocurrency, metals and indices.

The Aggressive Stance of the U.S. Federal Reserve

To combat the rising inflation in the US, the Federal Open Market Committee (FOMC) have been constantly increasing the borrowing cost since 2022. Due to this, the benchmark interest rate came into the range of 5.25% to 5.50%. This has been the highest interest rate in 22 years. Seeing the current macroeconomic conditions, the tightening cycle may continue despite the Federal Reserve’s aggressive actions.

What are the Recent Economic Indicators of The U.S.?

The recent economic data has defied the historical norms that are associated with central bank monetary policy. For instance, the ISM services sector PMI increased in August from 52.7 to 54.5. This increase has surpassed all expectations by reaching its highest level since February. The GDP Nowcast of Atlanta Federal indicates that the economy's growth rate can increase to 5.6% per annum in the third quarter.

The resilient economic conditions of the US, combined with tight labour markets, can result in a healthy per capita expenditure. This phenomenon will increase the demand rate, thus increasing inflation. Positive economic development may compel policymakers to implement more tightening measures this year.

The Release of US Inflation Data August 2023

The Consumer Price data for August is set to be released by The U.S. Bureau of Labor Statistics. Early projections indicate that the Consumer Price Index (CPI), which increased by 0.6% month-on-month last month, could rise by 0.2% month-on-month.

The tightening policy will be favoured if the actual data release exceeds the market estimate. On the other hand, if the expectations fall short, the US dollar could face some setbacks. Keep following the inflation news and trade effectively on one of The Best Trading Platform, YaMarkets.

US Dollar Index (DXY) Technical Analysis

From a technical perspective by YaMarkets, one of The Top Online Trading Platforms, the US dollar has broken out on the upside. It has surpassed the trendline resistance and its May peak as well. It has now reached a multi-month high above the 105.00 handle. If the technical support remains above 104.50, the DXY index could maintain its upward momentum. In this case, the prices may go up to 105.30, which is a key resistance level marked by a 38.2% Fibonacci retracement of September 2023 to July 2023 decline.

On the other hand, if sellers regain control and trigger a pullback, initial support is expected at 104.50, followed by 103.95. Below these levels, the next significant support area in the event of further weakness is situated at 103.50.

Trade USD on the Top Online Trading Platform - YaMarkets

Be on the lookout for changes in the USD prices. The different economic indicators stated above could impact the prices of the USD. All you have to do is keep following the news and trade cautiously on one of The Best Trading Platform - YaMarkets. Trading on YaMarkets is a simple and efficient process. With access to different types of accounts, you can choose one which best suits your trading habits. Open your live account today on one of the Top Online Trading Platforms, YaMarkets.

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