As the markets await the key fundamental news later today, with all eyes on the FED, it is the US dollar that takes centre stage, with the Japanese yen then replacing it towards the end of the week. For the currency of first reserve, much will depend on the tone of the associated statement, and with interest rates likely to remain on hold, it will be the degree of hawkishness which ultimately will dictate market direction for the US dollar.
From a technical perspective the daily US dollar index chart remains bullish, with the 12,110 area being tested once again in early trading, and the index recovering yesterday’s losses to trade at 12,092 at the time of writing. This morning’s price action is also building a solid platform of support in the 12,065 area, with a further much deeper region below in the 12,020 area, and these should combine to prevent the index falling far in the event of any short term reaction to the news. For the longer term, if the 12,110 level is breached following the release, then we can expect to see further upside momentum with the USDX moving higher to test the 12,200 high of February this year.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading