The dollar index has shown that the US dollar is rising against a number of currencies this Wednesday, according to Forex patterns. This was likely due to the fact that the Fed has left interest rates as they are, but only temporarily. While they have forgone a rate hike for now, they are still set to raise rates before the year ends.
Currently, interest rates stick at the 5.25%-5.50% range, whereas they plan on reaching the 5.50%-5.75% range. So it will be a 25 basis point increase. This sort of interest rate would be a multi-decade record. However, they plan for such a hike to be completely temporary, as they want to reduce it by 50 basis points in 2024. They had discussed such plans back in June.
So while some traders may think that the Fed is stopping its hikes altogether, the reality is that this is just a skip. Despite the skip, the Fed has been trying to signal its very hawkish attitude to make its stance clear. Hence, keep an eye on the potential for the dollar to dip by a couple of Forex pips in response to market dynamics.
The Influence of DXY on Dollar Forex Patterns
The dollar index managed to climb marginally, going higher by 0.09%, ending at 105.21. So the effect on Forex day trading has not been too great so far, fortunately. The index has shown that the dollar has been on an upwards streak for up to 9 weeks now. We have not seen such persistent dollar growth in 10 years. The US economy’s excellent growth has powered this dollar’s performance. This dollar rally will form a particular Forex chart pattern, a golden cross, which is a bullish sign for the currency. This only adds to the positive outlook.
The Fed states that their recent rate hikes should not discourage growth in the US economy. The growth should be resilient enough to withstand such challenges and possibly improve Forex patterns.
Finally, as the Fed skipped this rate hike, 2-year Treasury yields hit new high levels for 17 years.