The US Dollar Index (DXY) fell below a critical support level following Wednesday’s FOMC.
I’ve written about the 102.60 area several times this month, noting how it’s a key horizontal, the golden pocket, and channel support.
The dollar index closed Wednesday’s session at 102.53, marginally below the key level.
However, FOMC-driven moves are prone to failing later in the week.
It doesn’t mean that will happen with the DXY, but the next two trading days will tell us a lot about the dollar’s future direction.
If dollar bulls can reclaim the 102.55/60 area on a 4-hour and daily closing basis, a rally back to the 103.50 yearly open is likely.
Alternatively, further dollar weakness is probable if Thursday and Friday hold below the 102.60 area.
The downside target if the DXY cannot reclaim 102.60 is the 101.25 range lows.
The 101.25 area served as support last May and triggered the bounce last month.
If bulls secure the 102.60 reclaim, the 103.50 yearly open is the next test, followed by 104.12.
What happens with the dollar index this week concerning 102.60 will be a key driver for EURUSD and even pairs like USDJPY and GBPUSD.
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