US Dollar Index clings to gains near 97.70, FOMC on sight

  • The index extends the weekly up move near 97.70.
  • US 10-year yields rebound from sub-2.02% levels.
  • FOMC meeting will be the salient event later today.

The greenback is prolonging its relentless up move this week, trading near 2-week highs in the 97.70 region when gauged by the US Dollar Index (DXY).

US Dollar Index focused on the Fed

The index is posting gains since last Wednesday, managing to extend the rebound from lows in the 96.50 region, where sits the key 200-day SMA and a multi-month support line.

DXY gained extra oxygen on Tuesday after President Draghi delivered a dovish message at the ECB Forum in Sintra (Portugal), stressing that the central bank is ready to cut interest rates and restore the asset purchases in order to push inflation closer to the bank’s 2% target.

On the US-China trade front, President Trump said he will meet his Chinese peer Xi Jingpin at the G-20 meeting in Japan next week following a ‘constructive’ telephone call on Tuesday.

Today’s main event will be the FOMC meeting, where all the attention is expected to gyrate around any mention of probable rate cuts in light of the negative impacts of the trade war on the US economy, the lack of upside pressure in consumer prices and the forecasted recession at some point during next year.

What to look for around USD

Markets participants will closely follow today’s FOMC meeting, where the new ‘dots plot’ is expected to show no rate hikes this year and the next one. The subsequent press conference by Chief J.Powell is also predicted to reinforce the dovish message at the event, emphasizing the goal of ‘sustaining expansion’. However, and in spite of some disappointing results in US fundamentals as of late, the labour market remains strong, wage growth keep pushing higher and the overall economy looks healthy - specially when we consider the weakness in overseas economies – all begging the question whether current speculations of rate cuts are not somewhat overdone.

US Dollar Index relevant levels

At the moment, the pair is gaining 0.02% at 97.66 and faces the next up barrier at 97.80 (monthly high Jun.3) seconded by 97.87 (61.8% Fibo of the 2017-2018 drop) and finally 98.37 (2019 high May 27). On the downside, a breach of 96.46 (low Jun.7) would open the door for 96.04 (50% Fibo of the 2017-2018 drop) and then 95.82 (low Feb.28).

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

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD quickly approaching September low

The EUR/USD pair extended its slump towards 1.1760 after ECB’s Lagarde said the economic recovery in the EU is “very uncertain, uneven and incomplete.” Next relevant support at 1.1736, this month low.


GBP/USD consolidates losses around 1.2840

The Pound plunged on risk-aversion and PM Johnson acknowledging the kingdom is undergoing a second coronavirus wave. Health authorities mull further restrictions.


XAU/USD dives to sub-$1900 levels, six-week lows

Gold extended last week's rejection slide from a short-term descending trend-line resistance and tumbled to six-week lows during the early North American session.

Gold News

Bitcoin gets back in the game

Bitcoin is on its third positive consecutive session in a row on the dominance chart and points to strong market share increases. Crypto market raises doubts on price development in the short term.

Read more

WTI plummets to $39, down more than 4%

Crude oil prices closed the previous week sharply higher but erased a large portion of those gains on Monday. As of writing, the barrel of West Texas Intermediate was down 4.2%, the biggest daily percentage decline in nearly two weeks, at $39.15.

Oil News