Market Spotlight: Powell Confirms .5% Rate Hike ‘On Table’ For May FOMC

37889 market spotlight powell confirms 5 rate hike on table for may fomc

USD Rally ContinuesThe US Dollar is seeing better demand into the end of the week following comments from Fed chairman Jerome Powell yesterday. Powell, who was taking part in an IMF meeting regarding the global economy, yesterday confirmed that larger .5% hikes are “on the table” for the next meeting on May 4th.Powell explained that, with inflation running well above the Fed’s target, it’s “appropriate to be moving a little more quickly”. These comments echo those of other Fed members recently who also voiced support for more aggressive tightening. The latest FOMC minutes showed that more than half of Fed members are now in support of hiking at quicker pace. With this in mind, USD is likely to remain well bid as we head towards the May meeting. However, the focus then, will be on the guidance offered with regards to rate hikes over the remainder of the year with markets now pricing in a further .5% hike in June.Technical ViewsDXYThe recent rally off the 99.88 level support has seen the Dollar Index trading back up to test the rising trend line resistance and 100.93 level. With MACD and RSI both bullish, the focus is on a further push higher for now with 102.99 the next big upside level to note. However, we are seeing bearish divergence creeping in suggesting room for potential correction lower near term.

Source: Tickmill

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