The US Dollar Index (DXY) has nearly erased its pre-FOMC losses, but can dollar bulls hold on this week?
Get the DXY key levels I’m watching and potential targets in today’s video, including brief updates on EURUSD and GBPUSD.
The DXY is bouncing back today after an aggressive selloff ahead of Wednesday’s FOMC.
Wednesday’s US CPI showed some cooling, which sent the dollar index significantly lower ahead of the Fed rate decision and press conference.
However, as mentioned in yesterday’s video, any significant moves ahead of FOMC should be taken with a grain of salt, and today’s rally is a perfect example.
As for the DXY, the key during Wednesday’s session was to see the index close the day above channel support at 104.70/80.
Although Wednesday’s candle closed at 104.68, that was enough to keep me cautiously bullish on the dollar.
The big test for dollar bulls now flips to 105.10.
We saw the DXY close above this mark on Tuesday but lost it with Wednesday’s close.
There’s reason to believe 105.10 may no longer be as significant as it once was, given how the DXY has chopped around this area.
That’s why I’m using the 2024 channel support at 104.70 as my barometer for continued US dollar strength or weakness.
As long as the DXY is above 104.70 on a daily closing basis, I favor the dollar higher toward 105.60 and 106.50.
Alternatively, a sustained break below 104.70 would signal dollar weakness toward 104.50 and 104.00.
As things stand, I remain cautiously bullish on the US dollar.
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