The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
Is the Fed holding the rate?
The Federal Funds Rate is announced at 21:00 MT time on December 11.
At the November session, the Federal Reserve cut the country’s main interest rate to 1.75%. It was the third decrease and expectedly the last during 2019. At the time, the Fed Chair Mr. Powell stated that the main inclination of the policymakers was to stop the rate-cutting cycle and observe the results. However, he also expressed the readiness to act as appropriate, leaving the space for the monetary maneuvers in case the trade war or the global economic slowdown takes the toll on the US economy. Eventually, this point was removed from the Fed statement, reassuring the public that the Fed’s monetary stance is more solid than it was previously thought. If the December rate announcement confirms that, it should strengthen the US dollar because the unchanged rate would signal the resilience of the American economy.
- If the Fed is hawkish, the USD will rise;
- If the Fed is dovish, the USD will fall.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
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This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.