On Thursday last week, the US Federal Reserve met general market expectations by hiking rates by 25bps, taking interest rates in the US to 5.00%. While there was some speculation over a possible slowdown in the rate hikes due to the banking crisis, the decision by the Federal Open Market Committee (FOMC) to hike rates for the ninth consecutive time saw the DXY spike down to test the round number support level of 102. During the press conference, Chair Powell indicated that the FOMC was committed to bringing inflation down to its target level of 2-3% but also warned that there was still significant downside risk to growth.

The DXY consolidated briefly along the 102 key support level but saw a strong correction to the upside toward the end of the week. Currently, the momentum to the upside on the DXY has been halted by the 103.50 resistance level which coincides with a confluence of Fibonacci Retracement levels of 50% in the shorter term and 38.2% from the longer term downtrend.

With the US Final GDP q/q and the Core PCE Price index, due to be released this week, with the data expected to signal a slowdown in inflation growth which could reignite the speculation of a slowdown in future rate hikes. Therefore, if the price maintains below the 103.50 resistance level, the DXY could reverse and continue with the downtrend, to retest the 102 key support level. If the price breaks below 102 the next key support level is at 100.80.