18 Sep 2013
US Dollar index testing 81.00 pre-FOMC
FXstreet.com (Edinburgh) -The greenback, measured by the US Dollar index, is trading on the softer side on Wednesday ahead of the crucial FOMC gathering.
DXY posed to suffer?
According to market consensus, Bernanke would try to ‘talk down’ expectations of future rate hikes, leaving the door open for further weakness in the greenback. According to BBH Global Currency Strategy Team, “Broadly speaking and relative to expectations, we think there can be only three scenarios: the Fed does what the market expects, it does less than the market expects, or it does more. Only in that third scenario would we expect the dollar to rally and Treasuries to sell off. We subjectively attribute less than a 10% chance of the Fed being more aggressive than the market expects”.
DXY levels to watch
At the moment the index is losing 0.08% at 81.07 and a break below 80.86 (low Aug.8) would expose 80.75 (low Aug.20) and finally 80.50 (low Jun.19). On the upside, the initial barrier aligns at 82.50 (high Aug.2) followed by 82.67 (high Sep.5) and then 83.02 (high Jul.18).
DXY posed to suffer?
According to market consensus, Bernanke would try to ‘talk down’ expectations of future rate hikes, leaving the door open for further weakness in the greenback. According to BBH Global Currency Strategy Team, “Broadly speaking and relative to expectations, we think there can be only three scenarios: the Fed does what the market expects, it does less than the market expects, or it does more. Only in that third scenario would we expect the dollar to rally and Treasuries to sell off. We subjectively attribute less than a 10% chance of the Fed being more aggressive than the market expects”.
DXY levels to watch
At the moment the index is losing 0.08% at 81.07 and a break below 80.86 (low Aug.8) would expose 80.75 (low Aug.20) and finally 80.50 (low Jun.19). On the upside, the initial barrier aligns at 82.50 (high Aug.2) followed by 82.67 (high Sep.5) and then 83.02 (high Jul.18).