Today I’m going to share the exactly US Dollar Index (DXY) levels I’m watching ahead of this week’s FOMC.
We’ll also discuss possible scenarios following FOMC, including what could send the dollar higher or lower in 2024.
Watch the video below and scroll down for the annotated charts and analysis.
The DXY managed to hold above the 2023 open last week at 103.50.
However, the 104.20 resistance level is holding firm as of today’s session.
That resistance area extends toward 104.50, and will be a critical factor as we head into this Wednesday’s FOMC-induced volatility.
For now, the DXY is range-bound between 103.50 support and 104.20/50 resistance.
The dollar has the opportunity to turn this recent price action into an inverse head and shoulders, but a sustained break above 104.20 and ideally 104.50 is required.
Until then, it’s probably best to play the range here.
Keep in mind that events like FOMC tend to trigger liquidity sweeps before the market establishes a general direction.
So knowing that the DXY is trapped between 103.50 and 104.20/50, there’s a good chance we get a sweep of one (or both) areas later this week.
Of course, time will tell, and it’s always best to avoid placing new trades ahead of FOMC.
Lastly, I think this year’s close relative to the 105.80 region will be telling in terms of what we get from the dollar in 2024.
A yearly close above 105.80 would suggest USD strength into 2024, while a close below could suggest a return to the 101.00 range lows.
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