The U.S. dollar index is trying to halt the leading bearish trend, although JPMorgan Bank indicated that there is a deterioration in the “weighted average” economic outlook, and Credit Suisse updated its forecast today and gives an 80% chance of a recession in the U.S. over the next 12 months versus an earlier projection of a 60% probability. In addition, BlackRock analysts, led by the fund’s chairman, Laurence D. Fink indicate that inflation may still be elevated in the coming years, which could point to a stagflationary scenario – unfavorable for the stock market and potentially also the US dollar. Raphael Bostic from the Atlanta Fed also commented on the US economy today. The commentary slightly strengthened the USD and supported the chances of a rate hike in May.

Fed Bostic

• Persistent inflation is still the result of pandemic disruptions. However, US still has a chance to ease it without triggering a recession or with the US unemployment rate above 4%;
• The Fed will have to pause and assess the economy and the path of inflation to avoid unnecessary economic damage;
• The collapse of the SVB and the banking crisis caused a re-examination of policy at the last meeting, but the situation quickly calmed down and allowed for a continued focus on inflation;
• Recent inflation data encouraging but prices are still rising too fast. The Fed needs to do more;
• The interest rate hikes of the past year are only now beginning to be felt. Their full impact will take time;
• After one more interest rate hike, the Fed may pause and assess the situation.

USDIDX chart, D1 interval. The index is trying to rebound slightly after Bostic’s comments, who stressed that a recession is not necessary and that the Fed is focusing on inflation and will raise rates in May. However, in the broader interval, looking at the Fibonacci retracements, the next support for the USD may only turn out to be the level at 98.9 points, where the 61.8 abolition of the downward wave, which began in 2021, is located. This would, of course, mean breaking through the psychological barrier of 100 points. Source: xStation5