USD Index Reverses On Powell’s Comments

Today’s positive U.S. GDP report brought a “cautious optimism” to the USD Index ahead of FED Chairman Jerome Powell’s speech. Powell has now taken the stage and sentiment has completely changed. The Greenback is slipping against the majors and December USD Index futures are falling toward several daily support levels.

Noon EST marked the beginning of Powell’s commentary. If you haven’t yet checked out the FX Leaders economic calendar, be sure to do so. It is a fantastic tool for monitoring important economic events such as Powell’s speech in real-time.

December USD Index Futures: Technical Outlook

A dovish commentary from Powell has the December USD Index on its back foot. Alluding to the fact that interest rates remain below “neutral,” the USD is backpedaling while gold and the equities indices have lept to the bull.

If the intraday correction in this market continues, two support levels will come into play during the late-U.S. session:

• Support(1): Daily SMA, 96.565
• Support(2): Bollinger MP, 96.485

Bottom Line: The CME FEDWatch Index has adjusted its expectations for a December rate hike upward to 79.2% from last week’s levels. This is a bit counterintuitive to Powell’s statements today, suggesting that there is no “definite plan” for monetary policy moving forward. In any case, the USD Index remains in bullish territory, trading near yearly highs.

For the remainder of the session, I will have buy orders queued up from above daily support at 96.575. This trade is good for 25 ticks using a static 1:1 risk vs reward scenario.