Speculation that the FOMC may deliver a timetable for the tapering of its QE program when it ends its meeting today is strengthening the US Dollar across the board. This has allowed the USD Index to gain 0.13% on the day, challenging the resistance at the 90.965 price level.
Traders are mostly on the sidelines but seem to have tilted bets slightly to the USD side of things, even as US President Joe Biden will deliver a speech today where additional stimulus plans will be rolled out. This has allowed the USD Index to recover from 1-month lows on a Wednesday where the FOMC looks set to steal the show.
The US bond markets also saw some tepid action on Wednesday, with the 10-year Treasury note adding 1.6% on the day as of the time of writing.
Technical Outlook for USD Index
Price continues to fight the resistance at 90.965 with an intraday violation that lacks conviction as traders wait on the FOMC. A dollar positive decision (possible timetable for tapering) could allow bulls to overcome the 90.965 resistance, which allows 91.261 to come on board as the initial upside target. 91.50 and 92.00 are additional resistance targets worthy of note if the advance continues.
On the other hand, a rejection at 90.965 as a result of a USD-negative FOMC play resumes the April decline in the USD Index, targeting 90.503 initially. Additional downside targets that will become relevant if the decline continues from there are 90.228 and 89.741 (25 February low).