US Dollar sees some upside as markets gear up for FOMC decision

NEW YORK (March 18) The US Dollar Index (DXY) trades at 103.55 on Monday, reflecting minor gains. Rising US Treasury yields also favored the favorable start of the week. All eyes are now on the Federal Reserve (Fed) decision on Wednesday and the updated economic projections.

The US economy is at a pivotal juncture as inflation remains sticky, while weak labor market data seem to be balancing investor expectations on the Fed’s timing for beginning the easing cycle. As for now, the first cut is seen in June.

Daily digest market movers: DXY rises on quiet Monday on the back of rising US Treasury yields

• The Federal Reserve is projected to exercise patience before implementing policy easing, considering that there seem to be signs of US inflation progress slowing down.  
• At present, the markets are predicting a 65% chance of a rate cut in June, with a full rate cut already considered in the projections for the July meeting.
• The updated Dot Plots will provide markets with additional guidance.
• Despite a recent dovish testimony by Powell, the majority of officials from the Federal Reserve express caution regarding premature monetary easing.
• US Treasury bond yields are rising with trading figures clocking in at 4.75% for the 2-year yield, 4.35% for the 5-year yield, and 4.33% for the 10-year yield.

FXStreet