The dollar index awaits the Fed’s report on Wednesday
- During the Asian trading session, the dollar index moved slightly below the 106.60 level.
Dollar index chart analysis
During the Asian trading session, the dollar index moved slightly below the 106.60 level. At the beginning of the EU session, there was an increase in volatility on the market, and the dollar dropped to 106.40 levels.
This is where we come across the EMA50 moving average, which provides support and stops the pullback. In the event that a breakout below occurs and I start a pullback, the EMA50 moving average would act as additional pressure on the index. Potential lower targets are 106.30 and 106.20 levels.
For a bullish option, we need a positive consolidation and a move above the 106.70 level. Then, we would have to try to maintain ourselves up there in order to form the bottom from which we would start to continue the recovery. Potential higher targets are 106.80 and 106.90 levels.
The economic calendar is full of news for the first week.
Today and tomorrow, economic news related to the Eurozone dominates German GDP, German CPI, Eurozone CPI and Chinese Manufacturing PMI. Wednesday is full of news from the US market, and the most important is the FED’s decision and the future interest rate.
Expectations are that the interest rate will remain at the same level as before at 5.50%. A rise in the interest rate would have a positive effect on the dollar index, and a fall in the interest rate would have a negative effect on the dollar index.
On Thursday, the Bank of England will announce its decision on its interest rate, and expectations are that it will remain at the same level and that there will be no changes until the next meeting.