USD Holds Tight Range Ahead Of FOMC - 9900 Support Level Paramount

By Michael Boutros, Currency Strategist

The greenback is firmer at the close of NorthAmerican trade with the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR ) advancing 0.04% on the session. The gains comeamid a mixed performance in US equities with the Dow and theS&P advancing 0.58% and 0.37% respectively while the NASDAQlagged with a loss of 0.30% on the session. All eyes now turn totomorrow’s central bank rate decision with investors eagerlyanticipating the quarterly economic and interest rate projectionsfrom the 17 FOMC members. We will be closely eyeing theaccompanying statement with any change to the “late2014” pledge to keep rates anchored likely to support thegreenback.

The dollar continues to hold just above the confluence of trendline support dating back to the 2012-lows and the 100-day moving average at 9912. The 9900 level remains paramount for the greenback with a break below risking substantial losses for the reserve currency. Such a scenario eyes key daily support at the confluence of the channel support and the 50% Fibonacci extension taken from the August 1st and October 27th troughs at 9850. Topside daily resistance stands with the 61.8% extension at 9945 with a breach above this level eyeing channel resistance at the psychological 10,000-mark.

An hourly chart shows the index continuing to trade within the confines of a descending channel formation dating back to April 4th with the dollar closing just below the 61.8% extension at 9945. Subsequent intra-day resistance targets are seen at 9975, 10,000, and 10,040 with key daily support holding steady at 9900 backed by 9875 and the 50% extension at 9850. Note that RSI has continued to consolidate into the apex of wedge formation with a pending breakout over the next several hours likely to offer further clarity on an intra-day bias. Look for the dollar to remain rather subdued ahead of tomorrow’s crucial FOMC interest rate decision with the greenback likely to take cues off the accompanying statement as well as the forecasts of the 17 members.

The greenback advanced against two of the fourcomponent currencies highlighted by a 0.25% advance against theAustralian dollar. Weaker than expected inflation data out ofAustralia last night has seemingly solidified expectations for theRBA to cut interest rates next month with the AUDUSD pair likely toremain under pressure. For complete aussie scalp targets refer tothis morning’s Winners/Losers Report . The euro is the top performer of the lot withan advance of 0.24% on the session. A successful bond auction inthe Netherlands temporarily eased debt concerns after budget talkscollapsed over the weekend with the Dutch Prime Minister Mark Rutteresigning as a result. Coupled with the rebound in broader marketsentiment, the advance in the single currency is likely to be shortlived with our medium-term bias remaining weighted to thedownside.

Tomorrow’s FOMC interest rate decisionwill be central focus for markets with the central bank widelyexpected to keep the benchmark interest rate at 0.25%. Traders willbe closely eyeing the accompanying statement with the quarterlyprojections by individual Fed members likely to steal the spotlighttomorrow. For a complete breakdown of tomorrow’s FOMC ratedecision and the implications for the dollar, refer totoday’s Trade the News Report .

Upcoming Events

Date

GMT

Importance

Release

Expected

Prior

4/25

12:30

HIGH

Durable Goods Orders (MAR)

-1.7%

2.2%

4/25

12:30

MEDIUM

Durables ex Transportation (MAR)

0.5%

1.6%

4/25

12:30

LOW

Non-Defense Capital Goods Orders ex Aircrafts (MAR)

1.0%

1.2%

4/25

12:30

LOW

Non-Defense Cap Goods Shipments ex Aircrafts (MAR)

1.4%

1.4%

4/25

12:30

HIGH

Federal Open Market Committee Interest Rate Decision

0.25%

0.25%

4/25

14:00

HIGH

FOMC Releases Projections of Economy & Fed Funds Rate

-

-

4/25

14:15

HIGH

Fed's Bernanke Holds Press Conference

-

-

---Written by Michael Boutros, Currency Strategist with DailyFX.com

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To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex for the latest charts and commentary

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DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2012/04/24/USD_Holds_Tight_Range_Ahead_of_FOMC_-_9900_Support_Level_Paramount.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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