DXY Levels to Know as FOMC Takes Center Stage
- Dollar Index holds key near-term range above support ahead of FOMC
- Updated targets & invalidation levels
- Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT
Technical Outlook:We’ve been tracking this setup in the dollar index for some time now and the focus heading into today’s FOMC interest rate decision is on a break of this key near-term range between 98.69&99.53. The broader risk remains lower sub-100.02 (bearish invalidation) where the 2015 high-day close converges on the 50% retracement & would necessitate a rally through the 4/21 uncovered close.
Notes: A closer look at near-term price action further highlights this range which carried over from last week. The index has continued to trade within the confines of a descending pitchfork formation extending off the March high with the lower parallel now converging on the 2016 open at 98.69.
Immediate resistance stands at the weekly opening-range highs (also the 200-day moving average) ~99.20 backed by 99.43/53- a breach there would be needed to shift the near-term focus higher towards 99.75 & 100.02. A downside break of the range targets the lower parallel (red) backed by the 97.87 and the 100% extension at 97.67.
Bottom line: from a trading standpoint, look for a break of this near-term range with a breach to fuel a larger recovery in the dollar before ultimately turning lower. Remember that markets are already expecting two additional hikes this year and should the policy statement show a greater willingness to further normalize policy (especially references to the central bank’s balance sheet) the dollar could see some near-term recovery within this broader decline.
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Relevant Data Releases
Other Setups in Play:
- AUD/JPY Targets 2017 Open Ahead of RBA Rate Decision
- Strategy Webinar: Fed, NFP to Define USD Monthly Open Range
- Peso Losses to Accelerate - USD/MXN Targets Critical Resistance
- Written by Michael Boutros, Currency Strategist with DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.