Ahead Of The Fed DXY Still Looking For Direction
Ahead of today’s CPI release for the US and Fed minutes I just wanted to take a quick look at the DXY and suggest some key levels we need to watch, and perhaps these two items of news will help to give the index some much-needed direction.
Since the beginning of the year, the index has been oscillating around the key 90 level, but never quite being able either to pull away in any meaningful way or take out this year’s low at 88.15. And this relatively tight range has, of course, been reflected in eurodollar which too has been trading in congestion since the beginning of the year.
But to return to the DXY, and the levels to watch in the run-up to the Fed minutes are, to the downside 89.08 where a break here would take the index down to 88.99 and on to test 88.50. However, if the CPI comes in significantly higher coupled with a very hawkish Fed 89.08 would provide the springboard for the index to test 90 once again, and offer the opportunity to take out the 2018 high at 90.89. And once again what happens in the DXY will be most reflected in the euro-dollar pair.
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