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The US dollar maintained its dominance in global markets as risk appetite remained subdued ahead of Micron Technology's earnings report. Despite a slight rebound in US equity futures following a sharp tech sector selloff, investors showed caution, avoiding aggressive positions until the semiconductor giant's results after market close. The dollar index (DXY) held above 104.50, reflecting safe-haven demand amid uncertainty about AI sector profitability and broader economic concerns.
The dollar's strength has significant implications for forex traders, particularly in EUR/USD and USD/JPY pairs, which are likely to remain volatile as market participants balance AI sector optimism against macroeconomic risks. Tech-heavy Nasdaq futures are under close watch, with potential follow-through selling if Micron's earnings fail to meet AI-driven growth expectations. Central bank policy divergence and ongoing geopolitical tensions in the Middle East also add to the dollar's tailwinds.
For the coming week, focus will shift to the Federal Reserve's inflation outlook and potential Fed funds futures adjustments. Gulf investors should monitor cross-asset correlations between tech stocks and the dollar, as AI sector performance could influence regional equity markets through tech-linked ETFs and global portfolio flows. Key technical levels to watch include DXY's 105.00 resistance and Nasdaq's 14,500 support.
