Could the European Central Bank cut interest rates before the United States? Technical analysis of the dollar index

On Wednesday (March 13), the dollar index rose and fell flat, and the euro rose against the dollar in the European session, reaching a maximum of 1.0947. The pound was flat against the dollar.

Investors turned their attention to Thursday's release of U.S. retail sales and producer price index (PPI) data in search of new trading momentum.

The US consumer price index rose 3.2 per cent in February from a year earlier and 0.4 per cent from the previous month, according to data released by the US Labor Bureau on Tuesday. Stripping out volatile food and energy prices, the core consumer price index rose 3.8 per cent from a year earlier and 0.4 per cent from the previous month.

According to the CME Group's "Federal Reserve Watch Tool", the market's expectation of the probability of the Federal Reserve cutting interest rates in June has fallen slightly to a level close to 60%.

The Federal Reserve will meet on March 19-20, when investors will focus on the FOMC's policy quarterly interest rate projections, including whether new employment and inflation data have triggered any changes.

Could the European Central Bank cut interest rates before the US?

Martins Kazaks, a member of the European Central Bank's governing council, said on Wednesday that a rate cut could take place "in the next few meetings."

In addition, the governor of the Bank of France, Francois Villeroy de Galhau, said that borrowing costs could be cut in the spring, with first action more likely in June than in April.

Justin Onuekwusi, chief investment officer at wealth manager St. James's Place, said: "It will be hard for the Fed not to show a tough stance at its next meeting because the fight against inflation is clearly not yet won. The report does alert you to the risk of stubbornly high inflation and has a huge impact on the overall portfolio. The market may have underestimated the impact of sticky inflation because they are still aggressively pricing in a June rate cut."

                                                                                                                 Dollar index daily chart 

Euro Dollar Technical Analysis

                                                                                                         (EUR/USD daily chart)

EUR/USD is currently trading above its pivot point of 1.09125, indicating bullish potential. Resistance levels are 1.09449, 1.09803 and 1.10152, with support levels at 1.08723, 1.08443 and 1.07986.

Bullish sentiment is supported by the 50-day and 200-day exponential moving averages at 1.08991 and 1.08536, respectively. The level of 1.09125 is important for future direction, and a drop below this level could signal a trend reversal.

GBP/USD technical analysis

                                                                                                          (GBP/USD daily chart)

GBP/USD is currently trading slightly below pivot point 1.27989 and is at a critical juncture that could determine its short-term direction. Resistance levels at 1.28425, 1.28932 and 1.29382 indicate potential challenges to the upside, while support levels at 1.27481, 1.27037 and 1.26704 provide a cushion for further declines.

The 50-day and 200-day exponential moving averages are at 1.27605 and 1.26886, respectively, suggesting bearish sentiment below the pivot. A pivot above 1.27989 could signal a shift to a more bullish trend.

At 20:48 Beijing time, the dollar index was trading at 102.8872, down 0.04%. The euro was trading at 1.0938/39, up 0.12%. GBP/USD was trading at 2796/97, up 0.02%.