DXY Index Coiling Ahead of FOMC Meeting Tomorrow

Talking Points:

– US Dollar (via DXY Index) has traded within a parsimonious operation this month, as traders have energetically awaited Fed Chair Jerome Powell’s initial FOMC meeting.

– British Pound backs off gains after weaker than approaching CPI in February, though a travel by a BOE in May is still anticipated.

Sentiment for a US Dollar stays churned as a calendar turns by a ides of March.

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After what valid to be a flighty Jan and February, Mar has been anything but, for a US Dollar. Since a DXY Index set a daily bearish pivotal annulment on Mar 1, cost movement has been contained between 89.43 and 90.38 over a past scarcely 3 weeks.

Now that we’re within a eye of a charge – a FOMC assembly in Washington, D.C. starts currently and concludes with newly-minted Fed Chair Jerome Powell’s press discussion tomorrow afternoon during 14 EDT/18 GMT – we’re not awaiting a DXY Index to shake off a coiling operation only yet.

In particular, given a light mercantile calendar for a United States between now and a FOMC press discussion tomorrow, it would mount to reason that a news handle is a many manly source of eventuality risk for FX markets. Indeed, with a beauty duration for a Trump administration’s alumninum and steel tariffs set to finish this entrance Friday, a tongue around a intensity tellurian trade fight seems staid to expand rather than de-escalate.

With a backdrop as such, USD/JPY seems staid to sojourn in a downtrend next a daily 21-EMA. EUR/USD should sojourn comparatively rangebound between a daily pivotal reversals determined on Feb 16 and Mar 1. GBP/USD should continue to work a approach out of a bullish streamer as, notwithstanding a skip in a Feb CPI news today, marketplace participants still feel strongly that a 25-bps rate travel by a Bank of England is entrance by May.

Concurrently, a DXY Index still needs to conquer 91.01, a 2017 low that has capped cost movement ever given a mangle on Jan 12 (failed morning doji star candle cluster on Jan 15 to 17 and a bearish pivotal annulment on Mar 1) before a bottom can be called opposite a USD-spectrum.

Read more: FX Markets Look to UK Japanese CPI; FOMC, RBNZ, BOE Meetings

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— Written by Christopher Vecchio, CFA, Senior Currency Strategist

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