- USD fades post-FOMC spike.
- Fed ready to hike rates in March.
- ISM manufacturing next of relevance.
The greenback, in terms of the US Dollar Index, has given back initial gains recorded in the wake of the FOMC meeting and is now retreating towards the 89.00 neighbourhood.
US Dollar now looks to ISM
The index remains depressed and still unable to gather some credible traction in spite of the recent hawkish twist seen from the Federal Reserve at yesterday’s meeting.
In fact, in what was the latest meeting presided by Janet Yellen, the Committee now sees consumer prices advancing further throughout this year, while growth risks stay roughly balance for the time being. However, members now signalled that further rate hikes are warranted and market participants are now expecting three extra rate hikes this year at the March, June and December meetings.
The prospects of further tightening did nothing to curb the pessimism around the buck, which remains anchored around the 89.00 handle and now looks to the critical US ISM manufacturing for some direction, at least in the near term.
US Dollar relevant levels
As of writing the index is retreating 0.08% at 89.06 and a break below 88.81 (low Jan.31) would open the door to 88.42 (2018 low Jan.25) and finally 87.64 (low Dec.16 2014). On the flip side, the next up barrier lines up at 90.70 (high Jan.22) followed by 90.98 (high Jan.18) and then 92.64 (high Jan.9).
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