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US DOLLAR Technical Analysis: USD Holds Support on FOMC Minutes

US DOLLAR Technical Analysis: USD Holds Support on FOMC Minutes

Tyler Yell, CMT, Currency Strategist

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Talking Points:

-US Dollar Technical Strategy: US Favors Buying Dips

-Short-Term Support Zone Held Before Bounce Turning Focus Toward New Highs

-US Dollar Remains Second-to-None Among G10

Wednesday’s Federal Reserve Meeting Minutes from October indicated that if the data remains steady, a hike remains a “live possibility.” The minutes come from a meeting before the monster payroll report in early November, so only a dismal November report is expected to pull the Federal Reserve away from the preference to hike. While the US Dollar may close in the red, we’re still only 35 points on the Dow Jones FXCM US Dollar Index’s 2015 high. What’s more, we remain above multiple levels of key support, which keeps the arguments for upcoming new multi-years applicable. One comparative market that has aligned with the US Dollar over 2015 is the UST 2yr Yield, which tracks market reactions to short-term monetary policy and interest rate hike path. The 2yr yield was rather smooth through the minutes and continues to show the market is accepting multiple rate hikes over the next few years without roiling the markets.

Immediate US Dollar support currently sits at the March 13th closing price of 12,127. An inability to close below this level would indicator a lot of strength that is best not fought unless you prefer counter-trend day trading. Above the March 13th closing high is a trendline that is drawn off the October 15th low and the November opening range low of 12,013 on November 3rd. The trendline and weekly pivot point presently sit around 12,162. On the topside, the focus turns to the YTD high of 12,219 and the Weekly R2 Pivot at 12,244.

US Dollar remains a buy-the-dip currency as the US Dollar sits atop the G10 in terms of presence above the 200 period moving average relative to 28 currency pairs. What appears to be holding US Dollar from an outright breakout is that the GBP, AUD, & JPY are holding relatively steady in the rankings with only the EUR at the bottom and presenting the biggest rise in the index. However, if we saw AUD or GBP take a large hit, we could see US Dollar take out the more optimistic bullish targets.

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