DXY hovers near the ascending channel's support at 107.50

Technical Perspective:
DXY pared recent gains as the price approached the ascending channel's lower bound and support at 107.50, which coincides with the 78.6% Fibonacci extension and 61.8% Fibonacci retracement. If DXY rebounds above 107.50, the price could gain upward momentum and retest the 109.50 resistance, which aligns with the 78.6% Fibonacci extension. Conversely, a break below the 107.50 support level could prompt a steeper decline toward the next support at 105.50.

Fundamental Perspective:
Hot inflation data in the US has spurred speculation that the Fed will not have much room to cut rates this year. Fed Chair Powell echoed this sentiment, indicating that the central bank will keep interest rates at restrictive levels.
Consequently, bond yields soared, with the US 10-year Treasury hovering around 4.6%, putting pressure on equities, though tech stocks remain resilient. Fed's hawkish stance and the inflationary nature of trade tariffs could continue to support the US dollar's strength.

Author: Li Xing Gan, CMT, CFTe,
Financial Market Strategist Consultant to Exness