US Dollar Index (DXY) Modestly Higher Ahead of Fed Minutes

New York (Feb 22)  The US dollar index (DXY), which measures the greenback’s strength against a basket of six major currencies, has extended Tuesday’s move to the upside ahead of today’s release of the minutes of the January FOMC meeting. DXY is currently trading at 101.62, a gain of 0.19% over Tuesday’s close. The dollar is currently stronger versus sterling and the euro, but is posting losses versus the yen.

Recent comments by Fed officials have signaled a rate increase in March is possible, an event that would be supportive to the dollar. The FOMC minutes should provide greater insight and set the direction of the trend in US dollar index in the weeks heading into the March FOMC meeting, which takes place March 14-15. The lack of a firm directive could put pressure on the dollar, leading to a pullback in DXY from resistance that is now in play at the February 15 high at 101.76.

On a move to the downside, support is at last week’s low at 100.41, which represents a test of DXY’s 20-day moving average as well as the 50% retracement level of the advance from the February reaction low to last week’s intraday high. As long as this level holds, the dollar index will remain in position to make another run up to resistance.

Should the dollar break higher, the next area to watch is the 102.00 level, which represents a 61.8% retracement of the decline from the January high to the February reaction low. Above this level, the next area to watch on a move to the upside is the high established on January 11, just shy of 103.00.

In today’s session, ahead of the FOMC minutes, which are due at 14:00 ET, existing home sales will be released at 10:00 ET.

Tomorrow, weekly jobless claims and the FHFA Housing Price Index will be released at 08:30 ET and 09:00 ET, respectively.

Source: EconomicaCalendar