The US Dollar index, which measures the strength of greenback against a trade-weighted basket of six major currencies, traded flat on Tuesday buy continuing the last week consolidation on the back of the upcoming Federal Reserve interest rate decision.
The federal reserve is expected to keep its interest rate decision unchanged this week, The rate-setting committee also is still waiting to see to what extent Trump administration policies on tax, spending and regulation will be able to get through Congress. A stimulus package could speed up the pace of hikes.
The Fed’s own Beige Book survey of regional economic conditions remained optimistic even as data flow increasingly under performed relative to consensus forecasts. If this foreshadows a sanguine attitude in the FOMC policy statement, the greenback is likely to advance.
On the other hand the first round of the French presidential election gave the US Dollar a challenging week by keeping the price in a tight range last week. And the upcoming final round of French election, scheduled for Sunday May 7, will also plays a important role in the price movement of Dollar index.
With all this mix bag of economic activities we expect that the journey for US Dollar may prove more challenging in coming future as The US economy has plainly stumbled. Weeks of disappointing economic data flow culminated in a depressing first quarter GDP report. Now the biggest concern is whether the central bank will take this pause in interest rate hike as a temporary solution or it a sign of a long lasting break.
US Dollar Index Futures Daily Technical Chart
On Technical ground the US Dollar Index is trading sideways near to the support level of 98.50, if the index will cross its support level of 98.50 in coming trading session we expect it to reach to the next support level which is near to the 97.10 mark. However if the index will cross the level of 99.30 with the support of positive economic data we may see a short bullish movement in the Index.
Advice to the traders:-
In short term traders are advised to avoid any long position in USD and take every bullish movement as a exit opportunity of existing open positions.