The US Dollar (USD) underwent a very harsh correction on Wednesday during the speech from US Federal Reserve (Fed) Chairman Jerome Powell. Markets disregarded all the remarks on the possibility of more hikes when needed and the freedom the Fed gives itself to react any way it sees fit to get inflation down to 2%. All that mattered was that the dot plot projections showed a consensus of interest-rate cuts in 2024. On the economic front, a chunky batch of data for the US is ahead, with Import and Export Prices, Jobless Claims and Retail Sales. Adding to that, no less than three major G7 central banks decide on interest rates. Expect very whipsaw moves and a spike in volatility ahead, with the possibility that US Dollar losses get easily retraced.

The US Dollar has had a firm bill to pay on Wednesday evening in the aftermath of the last Fed rate decision for 2023. The dot plot showed cuts for 2024, though that should not be anything new for traders as the Fed futures already pointed to cuts for 2024 back in the summer. With several other central banks ready to issue their dovish announcements and rate cut predictions for 2024, it is just a matter of time before markets adjust their bets favouring the US Dollar. In the rate differential, the US Dollar is still a strong yielder, and the Greenback could see ample investor inflow again, making the US Dollar Index (DXY) jump higher again. The DXY US Dollar Index could still resurge to more average levels seen recently. First level to recover is 103.00 as a big figure. Next up, 103.52 – near the 200-day Simple Moving Average (SMA) – is the ideal candidate to head next. From there, 104.00 and 104.60 (100-day SMA) are the levels to watch. To the downside, the field is open for more downturn. The only level standing in the way for the DXY to head to 101.00 is the low of November near 102.46. Once broken, a big area opens up towards 101.00, with 102.00 briefly holding for support.