The Dollar has found its footing after yesterday’s downdraft, but another bumpy ride during the overnight session may not bode well in front of today’s FOMC meeting results. Tuesday’s Durable Goods miss and negative revisions are widely seen as evidence of the impact of the Dollar’s strength on corporate earnings, and will be another factor that the Fed will weigh at this week’s meeting. Fed officials maintained their hawkish rhetoric in the run-up to this meeting, but the Dollar clearly has plenty to lose if there are enough acknowledgements of overseas risk concerns to see a Fed rate hike pushed back until later this year or 2016. There will be little in the way of US data for the market to digest early in the session, so the Dollar is likely to hold its ground in front of the FOMC meeting statement this afternoon. Near-term support for the March Dollar Index comes in at 94.18 this morning, but a sharp price move is more likely than not after the FOMC meeting results are released. A retest of Monday’s multi-year high may be ambitious even with a hawkish Fed outlook, but a dovish shift in Fed rhetoric could trigger fresh long liquidation and send the Dollar down to longer-term support at 93.60.
Technical Outlook: Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The market’s short-term trend is positive on the close above the 9-day moving average. The market is in a bearish position with the close below the 2nd swing support number. The next downside target is 93.07. The next area of resistance is around 94.92 and 95.81, while 1st support hits today at 93.56 and below there at 93.07.