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Published: 14 May 2026,09:21
Daily Market Analysis New
*US dollar gains after stronger-than-expected inflation data
*Producer prices record fastest annual increase since 2022
*Rising yields support expectations of tighter monetary policy
*Kevin Warsh confirmation creates uncertainty over Fed independence
The US dollar index, which tracks the greenback against a basket of six major currencies, continued to experience bullish momentum after the release of significantly stronger-than-expected U.S. inflation data, reinforcing expectations that the Federal Reserve may need to maintain or even tighten monetary policy further.
According to the Bureau of Labor Statistics, U.S. wholesale inflation accelerated sharply in April, with the Producer Price Index (PPI) rising 6% year-on-year — the strongest increase since 2022 and well above market expectations. The monthly increase was also the largest recorded since 2022, driven largely by surging energy costs linked to ongoing geopolitical tensions and rising freight transportation expenses.
At the same time, recent U.S. Consumer Price Index (CPI) data also came in at elevated levels, reinforcing concerns that inflation pressures remain persistent. The combination of higher inflation and rising oil prices has pushed U.S. Treasury yields higher, as institutional investors increasingly price in a higher-for-longer interest rate environment.
Despite the stronger inflation backdrop supporting the dollar, gains have remained somewhat limited due to uncertainty surrounding the leadership transition at the Federal Reserve.
The Senate narrowly confirmed Kevin Warsh as the next Federal Reserve Chair, setting the stage for one of the most closely watched transitions in decades. Markets are now focused on whether the central bank will maintain its tradition of policy independence amid increasing political scrutiny.
During his confirmation hearing, Warsh pledged that monetary policy decisions would remain “strictly independent.” However, concerns persist after Donald Trump repeatedly criticized the Fed for not cutting rates aggressively enough in the past and openly expressed expectations for lower borrowing costs under the new leadership.
This has created uncertainty among investors over the future direction of U.S. monetary policy, particularly with midterm political pressures beginning to intensify.
Technical Analysis
The dollar index is trading higher, currently testing the 98.50 resistance level, which acts as a key near-term breakout zone.
A confirmed breakout above 98.50 could extend gains toward the next resistance at 98.90, reinforcing the short-term bullish structure.
However, momentum indicators are showing signs of exhaustion. The MACD is losing bullish strength, while the RSI at 63 has eased from overbought territory, suggesting a potential near-term technical correction if the index fails to break higher.
In that scenario, the index may retest the 97.85 support level, with further downside toward 97.40 if selling pressure intensifies.
Resistance Levels: 98.50, 98.90
Support Levels: 97.85, 97.409
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