experienced a significant pullback, US dollar index launched a counterattack again. As Fed interest rate meeting approaches, it is likely that rate hike will be again at this meeting, which will provide strong support for the US dollar index. Non-US currencies that have rebounded recently will also be tested again, especially the euro, which has not yet entered the interest rate hike track, is likely to pull back sharply again. Before and after Fed interest rate meeting , the US dollar index will have a significant rebound. It is expected that the US dollar index will attack the previous high again and will be very likely to cross the 105 mark again. It is not ruled out that it will go higher.
ruble recently rebounded significantly. The main reason is that Russian central bank continues to cut interest rates. Each time the interest rate cut is as high as 300 points. If the interest rate cut is immediately reduced, it will fall below 10%. The interest rate decline is very strong, which suppresses the trend of Russian ruble . Therefore, the ruble broke through 12 against the RMB at its highest, but fell to around 10 in a single day, and the pullback is also very strong. It is currently fluctuating around 10 to 11. If the Russian Central Bank continues to cut interest rates, the ruble will fall. This time it will not be racing with the US dollar again, because on one side is interest rate hikes and on the other side is interest rate cuts, the US dollar against the ruble is likely to rise significantly.
USD index weekly K-line 10-day moving average rose to around 101.7903. Even during the decline of the USD index, this moving average continues to rise. It is currently significantly supported at this position, and the Fed's interest rate is approaching, so the USD index is unlikely to continue to fall. Even if it falls below this position, there will be a rebound. As shown in the figure, the key is that the expectation of the Fed's interest rate hike 50 points is at work. The dollar rebounds again are mainly affected by this. Non-US currencies will also correct or even fall back after the rebound, so the target position of the USD index's re-up may be around 105.
The United States has a strong desire to appreciate the US dollar, which is irreplaceable for alleviating US inflation. If the dollar appreciates sharply, the United States can import large quantities from countries around the world at lower prices, which is significant in reducing domestic prices. This is also something that is inevitable in previous US dollar cycles. In particular, the sharp appreciation of the US dollar against non-US currencies will significantly lower the import prices from Europe. Europe is one of the United States' most important trading partners. The US dollar has appreciated by about 20% against the Japanese yen in a short period of time. Japan is in the main supply chain of the United States, so the appreciation of the US dollar is very important for the United States to lower prices and thus reduce inflation.
This round of Fed interest rate hikes is aimed at neutral interest rates, which will be around 2.5%, or even around 3%. In order to achieve this goal, the Fed needs to raise interest rates by 150 or even 200 points. It is not ruled out that benchmark interest rate will surpass the neutral interest rate, so the Fed needs a larger interest rate hike. This is the basic process of the US dollar cycle. During this process, the US dollar index will continue to rise. 105 has exceeded the price. The next goal may be to try 110, and this process will be achieved quickly.
The European Central Bank is considering hikes again. At present, from the perspective of the central bank committee members, it is mainly that the first interest rate hike will be carried out in July, with interest rate hikes at 25 or 50 points. At that time, the euro will receive certain support and will rebound briefly against the US dollar. However, the Fed's interest rate hike is a long-term process and will not hinder the long-term rise of the US dollar. Although the euro rebounds, it is likely to be the same as the pound, that is, although the Bank of England is also raising interest rates, the pound will still fall against the US dollar. No matter how much the hike rate hikes in the UEFA Central Bank, it is difficult to hinder the US dollar index from a long-term rise. In the end, the US dollar index will break through 110 or even 120 as the basic target point.
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