The dollar index remains firmly in red; Fed verdict to provide fresh direction signals
The dollar fell further against its major world counterparts in early Wednesday’s trading as markets await Fed’s verdict later today.
The index extends steep downtrend for the third consecutive week and hit new three-months low just ticks ahead of round-figure support at 96.00.
The greenback’s sentiment remains negative on growing optimism over global recovery as world economies open after pandemic lockdown that booted risk appetite.
Negative studies on daily/weekly charts support scenario as bears broke below significant support at 96.25 (200WMA) on Tuesday, however, oversold daily conditions give initial warning.
Bears need break of 95.97 (50% retracement of 88.14/103.80, 2018/2020 uptrend) and 95.35 (23 Jun 2019 low) to open way towards key support at 94.59 (2020 low posted on 9 Mar).
Broken Fibo support at 96.76 (76.4% of 94.59/103.80) now offers solid barrier and third consecutive close below here would add to negative near-term picture.
Falling 10DMA (97.24) marks pivotal resistance and only break and close above would put bears on hold.
The US central bank is expected to keep interest rates unchanged and confirm its commitment to further support the economy, hurt badly by coronavirus crisis, with negative rates scenario sidelined for now.
Markets will closely watch Fed’s economic projections and their stance about the pace of recovery towards pre-crisis levels and stabilization of labor sector.
Res: 96.43; 96.76; 97.24; 98.11
Sup: 96.08; 95.97; 95.16; 94.59