Published: 20 February 2026,07:42
Daily Market Analysis New
*The US dollar is moderately supported by resilient labor market data and cautious Fed messaging favoring a higher-for-longer policy stance.
*Weekly jobless claims and steady factory output reinforce economic stability, reducing near-term expectations for rate cuts.
*Treasury yields remain elevated, helping underpin the greenback against major currencies such as the euro and pound.
Market Summary:
The US dollar remains moderately supported as resilient labor market data and cautious signals from the Federal Reserve reinforce a higher-for-longer policy narrative. Weekly jobless claims surprised to the downside, falling to around 206,000, while factory output also held firm together underscoring continued economic stability and giving policymakers room to delay aggressive easing. The latest Fed minutes revealed some internal divisions but broadly confirmed officials are in no hurry to cut rates and are prepared to keep policy restrictive if inflation proves sticky. As a result, Treasury yields have stayed relatively elevated, underpinning the greenback in the near term.
Market pricing has adjusted accordingly. Futures markets have trimmed expectations for imminent easing and pushed the bulk of rate-cut bets further into mid-2026, helping the dollar extend its recent gains against major peers such as the euro and pound. Political uncertainty in Europe including speculation surrounding Christine Lagarde’s potential early departure from the European Central Bank has added indirect support to the dollar by weighing on the euro. At the same time, rising geopolitical tensions between the United States and Iran have reinforced safe-haven demand, keeping the dollar index biased higher even without a decisive breakout.
However, the medium-term outlook is becoming more two-sided. Oil-driven inflation risks could complicate the Fed’s policy path, while any meaningful de-escalation in Middle East tensions may remove part of the dollar’s geopolitical premium. Notably, the New York Fed recently conducted a rare USD/JPY “rate check” on behalf of the US Treasury that is a move often viewed as preparatory groundwork for potential FX intervention suggesting US authorities may be increasingly sensitive to excessive dollar strength. For now, the greenback remains underpinned by relative growth resilience and firm yields, but upside momentum may become more capped as policy and geopolitical dynamics evolve.
Technical Analysis
The Dollar Index (DXY) is rebounding within its broader range, currently pressing against resistance at 97.96 after defending support at 96.99. Price has rotated higher from the 95.74 base, forming a short-term sequence of higher lows, but remains capped beneath the upper boundary near 99.60.
RSI has climbed into the mid-60s, signaling strengthening bullish momentum and approaching overbought territory. Meanwhile, MACD has crossed firmly into positive territory, with the histogram expanding, reflecting increasing upside momentum following the recent recovery.
Traders should watch closely for a decisive break above 97.96. A sustained breakout could open the path toward the 99.60 resistance zone. However, failure to clear this level may trigger another rotation lower, with 96.99 acting as initial support, followed by 95.74 if downside pressure re-emerges.
Resistance Levels: 98.00, 99.60
Support Levels: 97.00, 95.70
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