The dollar index firmed on Wednesday, as markets await the Fed rate decision, at the end of the first policy meeting this year.
Although the price rose slightly, it remains within the larger congestion and lacks direction as a number of long-legged Doji candles in pat days signals strong indecision.
Fresh gains probe again through 200DMA (103.31) which limited several attacks and kept the price in a sideways mode.
Near-term action, however, remains slightly bullishly aligned, as rising 10DMA (103.20) continues to underpin and bullish momentum is strengthening.
Close above 200DMA to generate initial bullish signal, with break above 103.66 pivot (daily cloud top / 50% retracement of 107.03/100.29 downtrend) to signal continuation of bull-leg from 100.29 (Dec 28 low).
The dollar is on track for 2.3% gain in January after heavy losses in past two months, lifted by fading expectations on the speed and scale of rate cuts after recent economic data signaled that the economy remains resilient and performs better than expected.
Bets for rate cuts as early as March dropped significantly since the start of the year, providing fresh boost to the greenback.
All eyes are on Fed, which is widely expected to keep interest rates unchanged, but signals about the central bank’s next steps will have the strongest impact on markets.
Hawkish stance (unchanged rates but signals that the first cut will not occur in March) will provide fresh support to dollar.
Res: 103.66; 104.11; 104.24; 104.46.
Sup: 103.20; 102.80; 102.32; 101.75.
