US Dollar Index Climbs to Weekly High Near 99.80 but Lacks Momentum for Further Gains

US Dollar Index Climbs to Weekly High Near 99.80 but Lacks Momentum for Further Gains

The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of major currencies, rose for the second consecutive day on Wednesday, reaching around 99.80 during the Asian trading session. This marks a weekly high and a move away from last week’s monthly low.

The upward move was supported by encouraging US economic data released on Tuesday, which eased recession fears. Notably, Durable Goods Orders fell by 6.3% in April, a smaller decline than expected, and orders excluding transportation increased slightly by 0.2%. Additionally, the Conference Board’s US Consumer Confidence Index rebounded strongly to 98 in May, marking the largest four-year increase and signaling improving economic and labor market optimism.

Despite this positive momentum, the DXY’s rally lacks strong conviction, as market participants remain cautious ahead of the Federal Reserve’s highly anticipated FOMC meeting minutes, scheduled for release later today. Concerns about US fiscal challenges and the possibility of future Fed rate cuts also weigh on the Dollar’s further upside potential.

Overall, while the Dollar shows strength on recent data, traders are likely to adopt a wait-and-see approach until more clarity emerges from the Fed’s policy insights.