The dollar index remains in a sideways mode for the third consecutive day and moving within a narrow range, just above new multi-month low.
Near-term price action slowed ahead of key event – Fed interest rate decision – which is expected to define fresh direction.
Technical picture on daily chart is firmly bearish as negative momentum continues to strengthen and MA’s are in bearish configuration (freshly formed 10/20DMA bear cross and converged 100/200DMA’s about to form a death cross), maintaining downside pressure and favoring scenario of bearish continuation.
However, bears need to clearly break pivotal supports at 100.33/00 (200WMA / psychological) to resume larger downtrend and focus on next technical support at 98.92 (Fibo 61.8% of 89.15/114.72 2021/2022 uptrend.
Immediate resistance lays at 100.68 (recent range top) with 101.00 zone (round figure / falling 10/20 DMA’s) marking the first pivot.
Bears are expected to remain fully in play while the price stays below this level, while break higher would generate initial warning.
The US central bank is expected to eventually start its policy easing cycle and make the first rate cut in more than four years, though with high uncertainty about the size of rate cut, as bets for cuts either by 25 or 50 basis points, recently moved in a large swings on quick changes in sentiment.
The latest numbers showed that bets for larger rate cut rose significantly in past few days, adding to hopes that the US policymakers may opt for more aggressive action today.
Growing concerns that the US economy might be in worse condition than initially thought, would add to such scenario (50 basis points cut) in which the dollar would come under fresh pressure.
Markets will also focus on the tone of Fed’s statement and following press conference, as well as signals for the next steps (markets expect more than 100 basis points cuts by the end of the year) which would contribute to overall picture.
Res: 100.68; 101.00; 101.46; 101.84
Sup: 100.22; 100.00; 98.92; 98.36
