The story of the last few weeks continues to be the journey of the USD. Each session we are getting bigger and bigger moves and there is no doubt that it continues to call the shots in the forex world.

Yesterday we saw another rally after US traders returned from their extended weekend breaks. We’ve had strength come back in over the past couple of sessions.

Traders are awaiting the FOMC minutes to see if there are any doubts surrounding the likely rate hikes that lay ahead. It appears that this is all but a certainty and the hikes will go ahead in March.

As such the major risk appears to be to the downside in the USD as the FOMC minutes do have the potential to unearth any demons lurking in the minds of Fed officials.

Key Levels

The USD is turning the corner, but the trend is still bearish at the moment. I’m bullish on a longer-term basis, however the fact that the short-term bounce has helped doesn’t mean that it is here to stay.

Of course, we will know more after the FOMC. The levels of interest at the moment are 90.50 and 88.50. If we break above the highs then I see us in full bull mode.

A disappointing FOMC or even a lack of a rate hike in March will see us back on the downtrend. Rates will be going up this year and that might just be the spark we need. The question is really just when?

US Dollar Index (DXY)- 240 min Chart.