US Dollar Index gains on service sector data

The US Dollar Index (DXY), which tracks the value of the US Dollar against other currencies, continued to rise on Monday. This marks the fourth consecutive day of gains for the dollar. Recent strong data from the service sector, along with cautious comments from Atlanta Federal Reserve President Raphael Bostic, have supported the dollar's strength. The Fed sets an important interest rate, which influences how banks lend to each other. Higher interest rates generally boost the dollar's value. When interest rates are high, the price of gold tends to decline. That's because investors often prefer interest-bearing assets over gold when rates rise. Central banks adjust interest rates to control inflation. If inflation is too high, they may raise rates, while lower inflation might lead to rate cuts. Although there are technical indicators suggesting caution, the DXY appears to be recovering from its recent lows. It has faced resistance just below the 104.00 level but shows signs of continued upward momentum. Investors are advised to conduct thorough research before making decisions, as market conditions can be unpredictable.