DXY – The day of the dollar

Ian Coleman FXStreet

Today, all the focus will be in the USD. We have numerous releases with the main event being the FOMC minutes tonight.

We witnessed the DOW Jones 30 (US30 on most platforms) reach an all-time high yesterday. An incredible achievement, I believe, under current circumstances. This has been boosted of late by vaccine hopes, Janet Yellen's appointment to the Treasury and solid economic US data.

With these dizzy heights in stocks, is the FOMC going to be more hawkish this evening? Can the FED keep propping up the market with stimulus?

Any hint, and we could see stocks tumble and a run back to the safe-haven currencies of USD, JPY and CHF.

That brings me to the charts with a focus on the USD Basket (DXY)

Technical

DXY one-hour

My focus is normally on larger timeframes but, with the main event tonight and EURUSD and GBPUSD highlighting possible tops, I have broken down into the one-hour.

A spike lower, possibly on FOMC statement, could see a completed Butterfly between 91.79-91.72.

Perhaps not too sexy on its own but, when we combine this with correlation and the EURUSD and GBPUSD charts, I think we could see a base.

EUR/USD one-hour

EURUSD completes a bearish Butterfly at 1.1965. Perhaps a spike higher as DXY completes its pattern?

GBP/USD eight-hours

The eight-hour chart highlights an Ending Wedge with the 88.6% pullback at 1.3391 and short-term resistance at 1.3406. Wedge breakouts are normally impulsive with strong moves lower.

I think USD bears beware This really could be ‘The Day of USD'.

Author

Ian Coleman

FXStreet

Ian started his financial career at the age of 18 working as a Junior Swiss Broker at Godsell Astley and Pearce (London). He quickly moved through the ranks and was Desk Manager at RP Martins at the age of 29.

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