US Dollar Index DXY Rises About 1.1% This Week, Poised for Best Weekly Performance

The US Dollar Index DXY has risen about 1.1% this week, on track to record its best weekly performance in three months, as the Federal Reserve signaled further interest rate hikes. Following the Fed's first rate hike in over three years, JPMorgan, Standard Chartered, and Brown Brothers Harriman believe that this decision has removed the biggest obstacle to a stronger dollar. On Wednesday and Thursday, the dollar index consolidated near its 200-day moving average and slightly broke above this key level on Friday. Historical data shows that when the daily closing price of the dollar index surpasses the 200-day moving average, the dollar often continues to rise. Previously, in March and June, the index also strengthened further after breaking the 200-day moving average. The dollar index retraced some of its weekly gains as the yen narrowed its losses following reports of currency intervention by the Bank of Japan. The index could have recorded its largest single-week gain since the outbreak of the Iran war in March. Currency checks by the Bank of Japan are typically seen as a precursor to official intervention.

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