US Dollar clings to gains near 101.60, FOMC on sight
The greenback, measured by the US Dollar Index (DXY) has surrendered part of its initial gains and is now gravitating in the 100.60 area.
US Dollar focus on FOMC
The index is posting gains for the fourth session in a row on Wednesday, always backed by rising expectations of a Fed move at the March meeting.
USD has so far managed to keep the trade north of the 101.00 handle, although gains have failed to clear the interim target in the 101.70 area, last week’s spike post-Yellen’s testimony.
Supportive Fedspeak as of late and auspicious results from the US docket have combined to further sustain the rally in the buck. However, the up move seems to have decoupled from US yields performance, probably showing some cautiousness among investors in light of the upcoming release of the FOMC minutes.
Consensus sees the Committee to reinforce the view of a rate hike sooner rather than later, reinforcing at the same time the case for a stronger buck. How much of this sentiment is already priced in remains to be seen, but it could surely act as a barrier for extra gains, at least in the near term.
Data wise in the US today, Existing Home Sales have surpassed estimates during January, increasing by nearly 5.70 million units, or 3.3% inter-month.
US Dollar relevant levels
The index is gaining 0.13% at 101.58 facing the next resistance at 101.75 (high Feb.15) ahead of 101.95 (23.6% Fibo of the November-January up move) and finally 10296 (low Jan.11). On the flip side, a break below 100.99 (high Feb.20) would aim for 100.52 (20-day sma) and then 100.40 (low Feb.16).
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
