USDX: Decreased Uncertainty Regarding US Monetary Policy Next Steps

USDX: Decreased Uncertainty Regarding US Monetary Policy Next Steps

The US Dollar Index (USDX) reached its year-to-date high of 108.00 before entering a corrective phase. This is largely due to the limited impact of the Federal Open Market Committee (FOMC) meeting minutes on the market.

Key Points from the FOMC Minutes:

• Interest Rate Cut: A unanimous decision to reduce the interest rate to 4.50–4.75% was supported.
• Monetary Policy: The securities purchase caps remain unchanged at $160 billion for repo transactions and $25 billion for US Treasury securities.
• Factors for Future Decisions: Labor market conditions, inflation, and growth projections for key sectors will be the main indicators for a potential rate cut in December (-25 basis points).
• Market Expectations: According to the CME FedWatch Tool, the probability of a minimal rate cut on December 18th increased from 52.3% to 66.5%.

US Treasury Market Situation:

• 10-Year Treasury Yield: Currently at 4.298%, slightly down from 4.412% on Monday.
• Trend: While growth in the US Treasury market has slowed, there has not been a significant decline, and the USDX is maintaining its current levels.

Support and Resistance Levels:

• Resistance:
  • 107.40
  • 109.60
• Support:
  • 106.20
  • 104.10

Technical Indicators:

• Alligator: The EMA of the indicator is widening, reinforcing the buy signal.
• AO (Awesome Oscillator): Correction bars are forming above the zero line.

Trading Strategy:

Buy Scenario:

• Entry Point: Buy above 107.40.
• Target: 109.60.
• Stop Loss: 106.50.
• Duration: 7+ days.

Sell Scenario:

• Entry Point: Sell below 106.20.
• Target: 104.10.
• Stop Loss: 107.00.

Scenario Summary:

The movement of USDX will be heavily influenced by future FOMC announcements and economic data, so cautious trading is recommended.