USD to fall before returning to bullish momentum

USD exchange rate today (February 17): Early morning of February 17, the State Bank announced the central exchange rate of Vietnamese Dong to USD is currently at 24,562 VND.

The USD Index (DXY), which measures the greenback's performance against six major currencies, stood at 106.79.

Forecast of USD trend this week

The DXY index saw a sharp decline last week. US President Donald Trump's delay in imposing new tariffs and growing optimism about peace talks between Russia and Ukraine overshadowed the impact of high inflation on the greenback last week.

Chart of DXY Index fluctuations over the past week. Photo: Marketwatch

Federal Reserve Chairman Jerome Powell said in testimony before the Senate Banking, Housing and Urban Affairs Committee that the Fed's stance on interest rates reflects a stable U.S. economy , with low unemployment and inflation still above the Fed's 2% target, stressing that the central bank is in no rush to cut short-term interest rates. Meanwhile, traders are betting that the Fed could cut rates twice this year.

The US consumer price index (CPI) rose 3 percent in January, up from 2.87 percent in December 2022. Meanwhile, the core CPI rose 3.29 percent in January, up from 3.21 percent in the previous month.

The short-term picture is quite negative for the DXY index. Resistance for the index is at 107.30 and then 107.80-108. The DXY index could fall to 106 and even 105.

The area around 105 is considered a strong support level that can prevent further declines in the DXY index. Experts expect the DXY index to reverse higher from around 105 and rise back to the 108-110 zone in the medium term.

The EUR/USD pair has been well within its range over the past week. Optimism about a near-term peace deal between Russia and Ukraine has been driving the common European currency higher. The currency has been trading between 1.02 and 1.0550 for the past few weeks. The index needs to break above 1.0550 and then rise above 1.0650 to turn the short-term outlook bullish. Only then would a rally to 1.08 emerge.

Conversely, failure to break above 1.0550 could see EUR/USD drop back to the 1.04-1.02 zone. In that case, this trading range would remain intact for some time.

The yield on the 10-year US Treasury note jumped to 4.65% last week after the inflation data was released. But it failed to hold that high and has since fallen sharply. The yield is likely to stay around 4.4-4.35% this week. If it breaks 4.35%, it could then fall to 4.25%, a very important support level. A bounce from this support level could push the 10-year US Treasury note yield back to 4.5-4.6%.

USD exchange rate today, February 17: USD will decrease before returning to the upward trend. Photo: South China Morning Post

Domestic USD exchange rate today

In the domestic market, at the beginning of the trading session on February 17, the State Bank announced the central exchange rate of the Vietnamese Dong to the USD at 24,562 VND.

* The reference exchange rate at the State Bank's transaction office has slightly decreased, currently at: 23,384 VND - 25,740 VND.

USD exchange rates at commercial banks are as follows: