Tuesday, the USD reversed late in the session and is now trading lower against a basket of major currencies. The selling pressure is being led by a strong upward surge in the Euro. The Canadian Dollar is also making a comeback along with the British Pound. The Japanese Yen has been strong all session as traders raise their bets that the Fed will target flattening the yield curve in Wednesday’s policy announcements.
At 19:06 GMT, June US Dollar Index futures are trading 96.310, down 0.298 or -0.31%.
The FOMC met Tuesday and will announce its latest monetary policy decision Wednesday at 18:00 GMT. While markets expect short-term interest rates to remain steady at Zero, investors will be watching Fed Chairman Powell’s statement for clues over the Fed’s next move.
The weak price action in the USD Vs a basket of peer currencies lately has been driven by investors shedding safe-haven assets as they continue to bet on a fast recovery by the US economy.
The main trend is South according to the daily swing chart. The downtrend was reaffirmed Tuesday when sellers took out Friday’s closing price reversal bottom at 96.430.
The minor trend is down. A trade through 97.065 will change the minor trend to up. This will also shift momentum to the Northside.
The main range is 94.530 to 103.960. Its Fibo retracement zone at 98.130 to 99.245 is controlling the longer-term direction of the index. It is resistance too.
The price action suggests the FOMC will deliver a Dovish message for interest rates. And some Bearish traders are also suggesting central bank policymakers are going to announce that they are targeting the yield curve.
Last week, Treasury yields surged higher which drew the attention of the Fed. They may announce their intention to flatten the yield curve, which would be Bearish for the US Dollar Index.
Have a healthy day, Keep the Faith!
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