Ella 
The U.S. dollar index (DXY), which measures the greenback’s value against six major currencies, is hovering just below Friday’s six-month high. In early European trade on Monday, the index was hovering around 105.70.
The U.S. dollar index struggled to gain momentum, possibly due to market caution ahead of U.S. economic data.
Investors will be closely watching the U.S. economic calendar, which will include key data releases such as consumer confidence, durable goods orders, jobless claims and core personal consumption expenditures (PCE), the Fed’s preferred measure of inflation. standard.
The annual core PCE rate is expected to fall to 3.9% from 4.2%. These data sets will provide insights into the U.S. economic situation, affecting trading bets involving the U.S. dollar.
U.S. Treasury yields have surged to multi-year highs. The 10-year Treasury yield is around 4.46%, below its highest level since 2007. The sharp rise in yields may be one reason for the dollar’s strength.
The Federal Reserve held its sixth monetary policy meeting last week. The Fed chose to keep interest rates unchanged but raised its forecast for the federal funds rate (FFR). Currently, policymakers expect the federal funds rate to reach 5.60% in 2023 and to increase from 4.6% to 5.1% in 2024.
Additionally, comments from Boston Fed President Susan Collins and U.S. Federal Reserve Board of Governors Michelle W. Bowman suggested further tightening of interest rates was possible, emphasizing the need for patience and More rate hikes to control inflation. Rising interest rates are likely to support the dollar.
The Fed is determined to keep interest rates high to get inflation back to its 2% target, bolstering expectations of at least another 25 basis points of interest rates before the end of the year.
Additionally, the Fed’s “dot plot” now shows just two rate hikes in 2024, down from the four hikes previously forecast.
