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Weekly Technical Outlook: Dubious Dollar Strength Ahead of FOMC

Weekly Technical Outlook: Dubious Dollar Strength Ahead of FOMC

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FOMC to Drive Dollar Price Action

The Federal Reserve monetary policy meeting starts tomorrow with the release of the committee’s updated projections on growth, inflation and employment slated for the Wednesday. Newly minted Fed Chairman Jerome Powell is expected to hike interest rates by 25bps at his inaugural address with market participants awaiting the highly anticipated interest rate dot-plot and quarterly projections.

The US Dollar is under pressure to start the week with the DXY continuing to consolidate just below the March high-day reversal close at 90.24. The price analog we’ve been tracking from the 1994 decline suggests the risk remains for a new low in the index before turning higher and heading into this week’s event risk we’ll be looking for a possible exhaustion high in the index.

Key Levels in Focus

DXY – Risk is lower while below monthly open resistance at 90.67- Key support / bullish invalidation at the low-day reversal close at 89.08

EUR/USD – Price remains constructive near-term while above 1.2240 with a b reach above the yearly high-day close at 1.2409 needed to mark resumption of the broader uptrend.

GBPUSD – monthly OR break leaves risk higher into the March close- Key resistance at the yearly high-day close at 1.4134. Outlook remains constructive while above 1.3850s.

USD/CAD – Critical resistance being tested at 1.3103/32- Looking for signs of exhaustion while below this threshold. Initial support rests with Friday’s low ~1.2920s.

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Keep in mind, it’s a BIG week for event risk with central bank rate decision on tap from the FOMC, BoE (Bank of England) and the RBNZ (Reserve Bank of Australia) on tap. In this webinar we review Updated technical setups on DXY, EURUSD, USDCHF, EURAUD, AUDUSD, AUDJPY, USDCAD, GBPUSD and GBPJPY.

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Key Data Releases

Economic Calendar

Other Setups in Play:

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---Written by Michael Boutros, Currency Strategist with DailyFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.