The DXY broke with a long term bull structure
FOMC delivers a very dovish statement
Trade war with China takes a toll at the US economy
The US Dollar index just broke with a very important long term bullish structure (blue trend line) after a very dovish FOMC statement delivered where the Fed dropped from statement previous language that it would 'be patient' on future policy adjustments and Bullard saying that he is open to rate cut if inflation still low after summer.
On the fundamental side, I see nothing but downside and I'm looking forward to the next meeting in July. Some oddsmakers put the probability of a rate cut by 25 basis points at more than 61% and a cut of 50 BP at 39% (CME, ZQN9)
On the technical side, we expected the $DXY to encounter support at the 95.85 level and right now it's bouncing from it. We expect a rally to the previous base around 96.50/96.80 for a continuation of the bearish move and a test of the 95 level.
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