Wall Street Today | Historic US Dollar Run Sounds 'Overbought' Alarm

The dollar lost traction, following a seemingly unstoppable rally that pushed the currency toward a record streak of weekly gains on bets the Federal Reserve will keep rates elevated.

The Bloomberg Dollar Spot Index wavered and was on pace for its eighth straight-up week — the longest run since 2005. A respite in the greenback's surge reduced the pressure on commodities. The S&P 500 saw a small gain after a three-day drop.

The greenback's 14-day Relative Strength Index is currently above 70 — which many traders see as one indication of an overbought market.

Bloomberg reported that Federal Reserve officials are increasingly optimistic they can quash inflation without causing serious economic pain.

Encouraged by signs that price pressures and the labor market are gradually cooling, Fed officials are intent on not squandering their chance at an elusive "soft landing" by raising interest rates too much, even as they remain committed to returning inflation to their 2% goal.

With that in mind, policymakers are preparing to hold rates steady at their Sept. 19-20 gathering and may lift them once more if needed this year, amid a spate of strong economic data.

Bloomberg reported oil is on track for a weekly gain after supply curbs from OPEC+ leaders Saudi Arabia, and Russia were extended for the rest of the year.

Adding to an already constrained fuel market, Russia plans to reduce diesel exports from its key western ports by a quarter this month and keep more supplies at home because of seasonal refinery maintenance. The news sent diesel futures rallying, outpacing gains in crude.

Underlying metrics across the oil market complex signal tighter conditions after OPEC+ leaders extended their production cuts. West Texas Intermediate’s December-December timespread, a favored trade of oil hedge funds, strengthened to the widest since late 2022.