The US Dollar jumped substantially in the first reaction on the FOMC Minutes on Wednesday, only to pare back some of its gains against a few of the G10 currencies. The dispersed move comes as investors are cherry picking the coins where the local central bank is supporting possibly more hikes, while the Greenback advances against those currencies supervised by central banks that have recently signalled to either have reached their pivot interest-rate level or will be cutting them soon. Proof of that is on the quote board, with the US Dollar strengthening 0.5% against the Polish Zloty (USD/PLN). Greenback also sees gains against Scandinavian pairs, up more than 0.25% against both the Norwegian Krone (USD/NOK) and the Swedish Krona (USD/SEK). This makes the US Dollar Index (DXY) head lower, though not in a firm nosedive move, but rather a step back that could be undone if the data later today supports the currency.
On the upside, look for 103.54 as the next key resistance level, which falls in line with the last week’s high. The 200-day Simple Moving Average (SMA) at 104.77 is still quite far away. So the intermediary level to look for is the psychological level at 104.00 and May 31 peak at 104.70.
On the downside, the 55-day SMA near 102.80 has proven its importance as it clearly underpinned price action on Friday and Monday by triggering a turnaround after the firm weakening of the Greenback. A touch lower, 102.50 will be vital to hold from a psychological point of view. In case the DXY slips below 102.50, more weakness is expected with a full slide to 102.00 and a retest of June’s low at 101.92.
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