US DOLLAR OUTLOOK: DXY INDEX PRICE SPIKES LOWER HEADED INTO FOMC MINUTES REALESE AS EUR/USD SURGES, USD/CAD & USD/JPY DECLINE
- US Dollar takes another spill lower as EUR/USD jumps again, USD/CAD and USD/JPY drop
- DXY Index has declined for three-straight trading sessions to a critical technical support level
- FOMC minutes due for release could provide a jolt to the US Dollar amid rising currency volatility
The US Dollar remains under pressure during Wednesday trade as USD price action slides broadly and experiences particular weakness against the EUR, CAD and JPY. The DXY Index now trades more than 1% below its Friday closing price after declining for the last three sessions straight.
US DOLLAR – DXY INDEX PRICE CHART: DAILY TIME FRAME (30 JANUARY TO 20 MAY 2020)
Chart created by @RichDvorakFX with TradingView
Though DXY price action declined by nearly 1.5% since last Friday’s close, the broader US Dollar Index has maintained a choppy trading range between the March 27 low around 98.25 and the April 06 high near the 100.90 mark. That said, as the DXY Index approaches the 99.00 handle, and month-to-date lows, there is potential that US Dollar downside proves limited if this area of technical confluence can offer a cushion of support.
This technical support zone, which is roughly highlighted by the mid-point retracement of March’s turbulent trading range, as well as the bottom channel of its Bollinger Bands, could springboard the US Dollar back higher. Nevertheless, a recovery attempt might face resistance posed by the 50-day moving average that failed to keep the DXY Index bolstered earlier in the week.
USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
That said, as USD price action and major currency pairs gyrate back and forth between major technical barriers, there is a possibility that implied volatility trading ranges might keep the direction of the US Dollar relatively contained. Also noteworthy, looking to the economic calendar, the release of FOMC minutes due Wednesday, May 20 at 18:00 GMT could cause a reaction in the US Dollar.
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
