June USD Index futures are holding strong, near the key 98.000 level. Muted trade across the majors is the primary culprit, with a significant drop in the GBP/USD propping up the entire index. For now, it appears traders are choosing to focus on commodities instead of currencies. Expect more slow forex action ahead of the 2:00 PM EST FOMC Minutes release.

Before every installation of the FED, whether it be a rate decision or meeting minutes, I like to take a look at the CME FEDWatch Index. It is a great tool for estimating future FED actions and the probabilities have been dead-on over the past several years. Today’s stats show rates have an 80% or better chance of holding steady until the September meeting. From September until the end of the year, the odds of a rate cut are as follows:

Meeting                          Probability Of A 25 Bps Rate Cut

September                                                34.5%

October                                                     38.9%

December                                                 43.2%

June USD Index Futures Approach Yearly Highs

Today has been a tight one for June USD Index futures. This isn’t anything unusual ahead of the FOMC and the daily range is certain to expand during the late session.

Here are the levels to watch going into the FOMC:

• Resistance(1): Psyche Level, 98.000
• Support(1): Daily SMA, 97.445

Overview: According to the CME FEDWatch, the odds of a late-2019 rate cut are growing. As a result, the markets will be looking for signs that the FED is thinking of adjusting policy toward “accommodative” instead of “flexible.” If this is the tone of today’s FOMC Minutes, then look for the June USD Index to favor a return to daily support near 97.500. If not, a rally to new yearly highs will become extremely likely.