US Dollar holding on to 101.00, FOMC on sight

The US Dollar Index (DXY) – which tracks the buck against a basket of its main rivals – is trading almost unchanged on Tuesday around the 101.00 handle.

US Dollar attention to Fed

The index seems to be consolidating in the 101.00 neighbourhood following yesterday’s deep pullback from tops in the 101.80/85 band.

The recent deal between non-OPEC oil producers has sparked a wave of risk-on trade at the beginning of the week, weighing on the buck and prompting sellers to step in.

Later in the NA session, US NFIB’s Business Optimism Index along with Export/Import Prices and the weekly report on US crude oil supplies by the API are all due, although market participants are expected to stay focused on the upcoming FOMC meeting.

It is worth mentioning that global markets have practically priced in a 25 bp rate hike by the Federal Reserve tomorrow. However, investors will closely follow both the statement and Yellen’s press conference looking for hints on the future steps by the Committee regarding monetary policy during 2017.

US Dollar relevant levels

The index is gaining 0.07% at 101.09 and a breakout of 101.82 (high Dec.12) would aim for 101.88 (high Nov.30) and finally 102.12 (2016 high Nov.24). On the flip side, the immediate support aligns at 100.86 (low Dec.12) followed by 99.87 (low Dec.5) and then 99.49 (low Dec.8).