USD Index Rejects Daily Support Levels

With a little over 24 hours to go until tomorrow’s much-anticipated FED announcement, the USD Index is attempting to recapture early-session losses. To say the least, it has been a whipsaw trading day for March USD Index futures. Price action has featured a steep sell-off, followed by a bounce from two daily downside support levels. The action is certainly hot and heavy going into the final FED meeting of 2018.

Today’s plunge in the USD Index is indicative of a coming dovish surprise from the FED. However, traders are not buying this notion. The CME FEDWatch Index is still showing a very strong chance of the December 19 bump north, currently sitting at 74.9%. It appears that today’s action is a product of something other than skepticism over scheduled FED policy moves.

USD Index Futures

March USD Index futures are fighting to recover, trading just off of the session open. In the event we see a positive close, the stage will be set for fresh yearly highs following Wednesday’s FED action.

Here are the levels to watch as we roll into the FOMC meeting:

• Resistance(1): Yearly High, 96.940
• Support(1): Bollinger MP, 96.295
• Support(2): Daily SMA, 96.200

Overview: Today’s test and rejection of the Bollinger MP and Daily SMA have maintained the long-term bullish trend for the USD Index. It appears that the Greenback is ready to close 2018 on a strong note.

Barring a major surprise tomorrow, I expect the 2018 high (96.940) to be taken out by the end of the week. As long as the USD Index remains in positive territory above daily support, one is best advised to maintain a bullish bias for the immediate future.