The pair hit new nearly two-week high on probe above the 112 handle on Wednesday, in an extension of previous day’s post-BoJ 0.8% rally (the biggest one-day gains since 11 July).
The dollar was additionally boosted by the news that Trump’s administration is considering to raise tariffs on Chinese goods.
Fresh gains approach pivotal barrier at 112.18 (Fibo 61.8% of 113.17/110.58 pullback, break of which is needed for a new bullish signal.
Fed’s policy decision is in focus, with the central bank widely expected to keep rates steady today and signal a rate hike in September, as inflation near 2% targets, stable growth and full employment support scenario.
The greenback may advance further if Fed’s decision meets expectations, but caution is required as daily techs send negative signals and warn of rally’s stall.
Overbought slow stochastic and bearish divergence of momentum, which trends lower in the negative territory, could be signals for ‘buy the rumor -sell the fact’ scenario after FOMC.
Pivotal supports lay at 111.61 (20SMA) and 111.46 (10SMA), firm break of which would be a negative signal and would shift near-term focus higher.
On the other side, sustained break above the 112.18 Fibo barrier will be a bullish signal, but according to weak techs, it’s not clear whether the pair will be able to hold gains.
Res: 112.18, 112.56, 113.17, 113.38
Sup: 111.88, 111.61, 111.46, 111.18
