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US Dollar Index remains under pressure near 95.70 ahead of FOMC

  • The index remains depressed near 95.70 on Wednesday.
  • Yields of the key US 10-year reference near tops beyond 2.72%.
  • US FOMC minutes next of relevance in the calendar.

In terms of the US Dollar Index (DXY), the greenback remains depressed and is trading close to weekly/YTD lows in the 95.70 region.

US Dollar Index looks to FOMC, trade

The index is reverting yesterday’s positive performance and has returned to the lower bound of the prevailing range in the 95.70/65 band amidst a better tone in the riskier assets and higher US yields.

In fact, market participants remain optimistic on the likeliness of a deal on he US-China trade dispute following recent progress at the Beijing talks. Expectations of an agreement will now look to Washington, where further talks are due to resume in the next days.

Yields of the key US 10-year note advanced beyond 2.73% during overnight trade, although they lost some upside momentum after the opening bell in Euroland.

In the data space, the only release of note will be the FOMC minutes seconded in relevance by the EIA’s weekly report on US crude oil inventories. In addition, Boston Fed E.Rosengren (voter, centrist), Chicago Fed. C.Evans (voter, centrist) and Atlanta Fed R.Bostic (non-voter, dovish) are all due to speak later in the day.

What to look for around USD

Trade talks are set to resume in the following days in Washington, underpinning the positive sentiment among the riskier assets, all in detriment of the buck. Today’s FOMC minutes will unveil the members’ views on the US economy and the Fed’s rate path, all against the backdrop of rising speculations of a ‘no hike’ this year.

US Dollar Index relevant levels

As of writing the index is down 0.16% at 95.77 and a break below 95.64 (2019 low Jan.7) would open the door to 94.79 (low Oct.16 2018) and finally 94.84 (200-day SMA). On the other hand, the next hurdle emerges at 96.00 (100-day SMA) followed by 96.57 (21-day SMA) and then 96.95 (high Jan.2).

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