US Dollar gains traction as markets digest economic shifts and geopolitical risks

• The US Dollar Index edges higher, recovering from earlier losses.
• Germany plans to inject 0.5 trillion euros into fiscal spending.
• Geopolitical uncertainty rises as Trump and Putin hold key discussions.
• Economic indicators show resilience despite market volatility.

The US Dollar Index (DXY), which measures the value of the US Dollar against a basket of six currencies, is stabilizing after avoiding a fresh five-month low. Traders react to Germany's significant fiscal expansion while monitoring geopolitical risks linked to ongoing talks between US President Donald Trump and Russian President Vladimir Putin. The index rebounded from earlier declines as sentiment shifted.

Daily digest market movers: US Dollar steadies amid economic releases

• Trump and Putin's high-level talks continue with reports indicating discussions on territorial matters, raising concerns over European security and NATO's response.
• Germany's fiscal expansion is driving market sentiment with increased government spending expected to impact European economic stability.
• On the US data front, Building Permits for February slightly exceeded expectations but declined compared to January's levels.
• Housing Starts surged, reflecting ongoing strength in the housing market despite broader economic uncertainties.
• Export and import prices rose more than anticipated, adding to inflation concerns.
• Industrial Production expanded at a robust pace, signaling resilience in US manufacturing.
• European stocks are rallying on optimism surrounding Germany's spending boost, while US equities are under pressure.
• The Federal Reserve is expected to hold rates steady on Wednesday with market pricing indicating little change in the central bank's tone and stance on the upcoming decision.

Technical analysis: US Dollar Index regains footing but remains under key resistance levels

The US Dollar Index is attempting to regain strength, though it remains near multi-month lows. The Relative Strength Index (RSI) is exiting oversold territory, suggesting a potential recovery, while the Moving Average Convergence Divergence (MACD) histogram continues to indicate bearish momentum, though the downside pressure is easing.

Resistance is seen at 104.20, followed by 104.80 and 105.20, marking key breakout levels. Support holds at 103.40, with a breach lower exposing 102.90. While short-term momentum is recovering, the index remains below its 50-day and 200-day simple moving averages, signaling that a sustained bullish trend is yet to form.