- DXY eyeing near-term resistance confluence ahead of FOMC
- Updated targets & invalidation levels
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Technical Outlook:The FOMC interest rate decision is upon us with the Dollar Index continuing to hold below confluence resistance around the 102-handle. The broader risk remains weighted to the downside while below this threshold with a breach above the monthly opening range highs needed to mark resumption of the broader uptrend.
That said, look for initial support at the March low which converges on the median-line of a newly formed pitchfork extending off the highs. Note that the 100-day moving average also converges on this region today around the 101-handle- a break below this zone would suggest a more significant high is in place with such a scenario targeting the lower parallel (red) backed by the 61.8% retracement at 100.39.
Notes: A closer look at price action highlights confluence near-term resistance at 101.76/78 just ahead of the release with the upper median-line parallel further highlighting our bullish invalidation level at 102. Interim support rests with the monthly open at 101.44 backed by the weekly low (which converges on the median-line) at 101.01.
Keep in mind markets are fully priced for a 25basis point hike and the focus is on the path of future rate increases. Look to the updated quarterly projections and interest rate dot plot to drive USD price action. From a trading standpoint, I’ll favor fading strength (FOMC rally) while within this formation with a break of the monthly opening range lows needed to mark a more significant change in behavior. Stay tuned to the Real Time News Feed for the latest news/commentary on today’s Fed release.
Relevant Data Releases
Other Setups in Play:
- NZD/USD: FOMC to Fuel Critical Range-Break
- EUR/CAD Pullback to be Viewed as Opportunity
- Strategy Webinar: USD, EUR Crosses in Focus as Markets Await Yellen
- Crude Prices Eye Initial Support Following Break of 2017 Range
- Written by Michael Boutros, Currency Strategist with DailyFX