US Dollar retreats from highs ahead of FOMC

The greenback, tracked by the US Dollar Index, is losing some upside momentum albeit it manages to keep the trade above the 96.00 handle.

US Dollar focus on FOMC

After a test of fresh highs near the key area around 96.30 in early trade, the index has now retraced part of that bull run and is navigating the 96.15/10 band.

A dovish message from the BoJ at its meeting earlier in the Asian session has ignited a sell off in the Japanese currency, mainly favouring the greenback via USD/JPY. The up move, however, stalled in the 96.20/30 band, where sit the ‘double tops’ from late August/early September and a retracement of the July-August drop.

Later in the session, USD will take centre stage in light of the FOMC meeting. Market consensus expects the Committee to keep Fed Fund rates unchanged despite increasing speculations on a potential hike in recent weeks.

Chair Yellen’s press conference will be key as well, as it could give clues regarding the next steps by the Federal Reserve.

US Dollar relevant levels

The index is advancing 0.11% at 96.12 and a break above 96.29 (spike post-BoJ Sep.21) would expose 96.50 (high Aug.5) and then 96.78 (23.6% Fibo of July-August drop). On the flip side, the next down barrier aligns at 95.81 (55-day sma) followed by 95.39 (100-day sma) and finally 94.76 (support line off 2016 low).