US Dollar Index clinches to gains near 98.30, FOMC eyed


  • DXY moves within a tight range around 98.30.
  • US 10-year yields drop to the 1.80% area.
  • Housing Starts, Building Permits, FOMC next on the docket.

The Greenback is alternating gains with losses amidst a narrow range around the 98.30 region when tracked by the US Dollar Index (DXY) on Wednesday.

US Dollar Index looks to the Fed

The index navigates a tight range after the choppy start of the week, although it manages well to keep the trade above the key 98.00 the figure for the time being.

DXY lost ground on Tuesday after the Fed pumped in more than $53 billion of cash into the banking system following the first repo operation in over a decade. Another repo operation is also expected today for around $75 billion.

In the US docket, the housing sector will be in the limelight in the first turn with the publication of Housing Starts and Building Permits. Later, the Federal Reserve is widely anticipated to reduce the FFTR by 25 bps. Attention will also be on Chief Powell’s press conference and revised projections for growth and inflation.

What to look for around USD

DXY regained poise at the beginning of the week and managed to retake the 98.00 mark and above. Today, the Fed is expected to extend its ‘mid-cycle adjustment’ and reduce the FFTR by another 25 bps, all under the pledge to ‘sustain the ongoing expansion’. Markets, however, appear somewhat overconfident in the fact that the Federal Reserve will embark on a sustained reduction of interest rates, leaving the door wide open for a probable disappointment at this week’s event. Looking at the broader picture, the positive view on the Dollar is well underpinned by the solid US labour market, strong consumer confidence and spending and the auspicious pick up in consumer prices, all adding to the buck’s safe haven appeal and the status of ‘global reserve currency’.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.08% at 98.29 and faces immediate contention at 97.86 (monthly low Sep.13) followed by 97.59 (100-day SMA) and finally 97.17 (low Aug.23). On the upside, a break above 99.10 (high Sep.12) would aim for 99.37 (2019 high Sep.3) and then 99.89 (monthly high May 11 2017).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

EUR/USD: Bulls in control above 1.1100 starting out ECB week

Following the bounce from near 1.1100 in early Asia, EUR/USD has entered a phase of consolidated near 1.1140 region ahead of the European open. Bulls await a fresh impetus for the next push above the 1.1150 mark ahead of Eurozone/ US PMIs.

EUR/USD News

GBP/USD recedes from three-week top above 1.2400, UK Manufacturing PMI eyed

GBP/USD prints three-day winning streak amid broad US dollar weakness. Calls of further help to British employees add to the upside momentum. Downbeat Brexit headlines confront the UK’s coronavirus optimism. The UK/US PMIs will join qualitative catalysts.

GBP/USD News

Trump tenderness, China's Caixin, boost Asia

Asia is off to a rollicking start to the week with equities performing strongly and currency markets rotating out of haven US Dollars. The turbocharging of bullish sentiment this morning has multiple drivers starting with President Donald Trump. 

Read more

Gold: Teasing a rectangle breakout, $1750 in sight

Gold bulls gathering pace for the next push higher. The extension of last week’s rally in the yellow metal is mainly driven by the sell-off in the US dollar across the board, in the wake of US-China trade war relief and escalating US riots.

Gold News

WTI: Overbought RSI challenges the bulls above $35.50

WTI seesaws around 7-week-old resistance line, retreats from highest since March 11. A short-term ascending trend line on the bears’ radars during the pullback. 100-day SMA, 61.8% Fibonacci retracement together offers strong upside barrier.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures