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USD Index In Rotation Ahead Of FED

As has been the theme all week long, March USD Index futures are in heavy rotation. Another tight daily range has given traders few chances for entry as limited participation prevails. At press time (about 11:00 AM EST), the March USD Index is trading just north of the 95.500 big-round-number.

During the U.S. pre-market hours, a collection of peripheral economic metrics was released to the public. Here is a look at the hard data:

Event                                                               Actual        Previous

MBA Mortgage Applications (Jan. 25)           -3.0%         -2.7%

ADP Employment Change (Jan.)                      213K          263K

Pending Home Sales (YoY, Dec.)                     -9.8%         -7.7%

It came as little surprise, but the U.S. real estate market continues to struggle mightily. Pending Home Sales (Dec.) fell by more than 2% year-over-year and MBA Mortgage Applications (Jan. 25) once again came in weaker than the previous release. Basically, FED policy and expectations of an economic slowdown have put the brakes on the U.S. housing market.

March USD Index Futures: Technical Outlook

USD traders are firmly on the sidelines in anticipation of the FED and FOMC Statements later today. Volatility and participation are light as exposure to the USD Index is being limited.

March USD Index Futures (DX), Daily Chart
March USD Index Futures (DX), Daily Chart

Here are the levels to watch for the March USD Index as the session wears on:

  • Resistance(1): Bollinger MP, 95.740
  • Support(1): Daily SMA, 95.530

Overview: For now, it is wait-and-see time for the USD. The coming FED Statements are expected to be dovish, focussing on “flexibility” and “patience.” Anything remotely hawkish is certain to shake up valuations. All in all, it isn’t a bad time to put the brakes on and wait for Jerome Powell to make his piece before diving into the USD.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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