DXY: Dollar index Threads Water Ahead of FOMC Minutes
At the time of writing, the Dollar index (DXY) was more or less unchanged on the day after bouncing from the 97.69 level two days ago. The appetite of traders to get involved at current levels appears to be low ahead of the latest Fed rate minutes.
However, looking beyond the near-term price action, the Dollar index is trending upwards. Two days after the latest Fed rate meeting, when the Fed opted to cut and then hinted that they will refrain from cutting interest rates in the months ahead, the dollar index created a double bottom at the 97.09 level.
In the context of the double bottom and the subsequent rally in the DXY, the bounce from the 97.69 level makes sense as it is more or less the 50% correction level of the rally from the double bottom and likewise November 1 low to the November high of 98.44. The price might try to revisit the 50% correction level, however, as long as the index trades above the November 1 low, I suspect the USD might be able to reach the median line, currently at the 98.72 level, of the channel that has dominated the price action in the dollar index since summer 2018. If the index fails to hold above the November 1 low, then that would probably mark a change in the long-term trend in the Dollar index.More content