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With the #FOMC rate statement ahead of us, we take a look at the #USD Index and the key levels to watch out for depending on the outcome.
Watch the video to find out more…
https://youtu.be/6AtORNGkT8I
Today. we’re going to take a look at the US Dollar Index ahead of the FOMC statement. The US Dollar usually underperforms for the month of April. However, there could be a turnaround around the corner.
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Currency heat map
If I bring in the currency heat map, we can see that the US Dollar typically performs well through the month of May.
The seasonal currency heatmap shows the difference between April and May for the USD Index and as we head into an FOMC statement.
Recently, the Fed has been talking about rising inflation. They would use other methods to control it rather than raising rates. If they mention any sort of bond tapering, we could see a reversal in the current trend.
May is actually meant to be the best performing month for the US Dollar. So, we’re quite close to a turnaround here.
Now there is also potential for the FOMC to talk about bond tapering, which could lead to a bit of US Dollar buying.
I’m going to look at a couple of demand zones and the first is at $90. The reason why I like this area is because the last time that the price went there, we had a significant move to the upside.
So, if I were to be a buyer of the US Dollar, then it would make sense to buy from that area. We could expect a bit of shock news pushing the price down for a potential reversal in the markets.
Looking at areas of demand, the $90.00 area would be an area likely to find support again. If the Fed talks about bond tapering, then we could see a shock move lower before the rally occurs.
Alternatively, we could look at normal changes in trend. At the moment, the market is making lower lows and lower highs.
Four-hour timeframe
At the four-hour timeframe, it’s been making lower lows and lower highs. If this was to suddenly change, then we could expect more upside in the market.
When I connect the starting to highs, it shows that the market has recently rejected an area on the trendline resistance.
Alternatively, if the price was to break through this trend line, then we could anticipate further upside to the US Dollar in line with the seasonal analysis.
So, keep an eye on this. We could see some big changes to the US Dollar soon.
If the price doesn’t move lower towards the demand zone, then we could watch this trendline resistance break. This trendline stems from the monthly timeframe. If this breaks, then the USD bulls will likely enter the market.
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