US Dollar sinks to lows near 101.30 ahead of US data, Fed

The US Dollar Index – which tracks the greenback vs. its main rivals – is rapidly losing ground on Wednesday, currently testing daily lows in the 101.35/30 band.

US Dollar all the attention on the FOMC

After a positive start of the week, the index is now shedding part of those earlier gains and testing the area of daily lows near 101.30 ahead of key US data releases and the critical FOMC meeting.

USD is expected to stay under scrutiny throughout the session in light of the publication of February’s US inflation figures and Retail Sales, seen at 2.7% YoY and 0.1% MoM, respectively. Further data will see the Empire State index, Business Inventories and the NAHB index.

Although a 25 bp rate hike seems to be a ‘done deal’ by now, investors’ attention will be on the Fed’s ‘dots plot’ and the press conference by Chairwoman J.Yellen.

Consensus among traders expects no changes to the already projected three rate hikes for the current year, although some FOMC governors have slipped the chance in past weeks of a fourth rate hike, opening the door for a more hawkish message today.

At her press conference, Chief Yellen is seen emphasizing the robust health of the US economy, particularly in the jobs sector, while consumer prices should reach the Fed’s goal within the next couple of years. Yellen is also expected to confirm a gradual tightening of monetary conditions.

US Dollar relevant levels

The index is losing 0.25% at 101.37 facing the next support at 101.16 (55-day sma) followed by 101.03 (low Mar.13) and finally 100.86 (100-day sma). On the flip side, a breakout of 101.66 (high Mar.14) would open the door to 102.05 (61.8% of the 2017 drop) and then 102.27 (high Mar.2).