Dollar dash
Key points
- The US Dollar Index touched a 13-month high driven by a hawkish Federal Reserve, followed by a two-day pullback after PCE inflation data matched expectations.
- The dollar's Relative Strength Index (RSI) completed a reversal from below 35 to above 78, a momentum thrust that historically precedes further near-term dollar strength.
- While this dollar breakout acts as a moderate headwind for equities, it exerts severe downward pressure on the broader commodity complex
Dollar dash
The US Dollar extended its prior uptrend by touching a 13-month high early last week. This aggressive bid was fueled by the Federal Reserve's recent policy statement, which market participants overwhelmingly interpreted as hawkish.
Thursday's release of the critical PCE inflation gauge aligned with consensus estimates, slightly moderating aggressive rate-hike expectations and prompting the dollar to decline for a second consecutive session on Friday. However, a tactical pullback is hardly surprising. It is worth noting that despite this recent weakness, the dollar remains hovering near one-year highs.

On Wednesday, the dollar index's Relative Strength Index (RSI) surged past the 78 threshold, triggering a highly constructive trend configuration alongs
