(MENAFN- DailyFX) USD breaks to fresh yearly highs ahead of FOMC- Look for a reaction at 94.20/27 Check out our 2018 US Dollar projections in our Join Michael for Live Weekly Strategy Webinars on The USD has rallied more than 6% off the yearly lows with the advance now testing an area of confluent resistance which could limit further gains near-term. A near-term structure has been in play throughout the April-May advance and keeps the focus higher . . . for now.
USD Daily Price Chart (DXY) Technical Outlook: In my latest , we noted that the DXY was, 'testing confluence resistance this week at 93.89-94.20 where the 2016 low-week reversal close and the 38.2% retracement of the 2017 decline converge on the median-line. The index is trading in this region today and a daily close above is needed to keep the immediate USD uptrend viable.
Daily support rests at 92.52 with bullish invalidation set to the yearly open at 92.28. A topside breach of this threshold targets subsequent resistance objectives at 95.15 and the 50% retracement at 96.04.
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USD 240min Price Chart (DXY) Notes: A closer look at USD price action sees the DXY trading within the confines of a well-defined ascending channel formation with the lower parallel highlighting near-term support at 93.42. Note that the will be marking bearish divergence into these highs IF this candle close at current levels. That said, we'll be looking for a reaction on a stretch into 94.20/27 for possible exhaustion.
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Bottom line: While the broader outlook remains weighted to the topside in the USD, the index is testing Big resistance here just ahead of the release of the FOMC minutes later today. IF the Dollar is going to get a pullback, this would be a good spot- a break below 93.42 targets a set-back towards 92.52 & 92.28- both areas of interest for IF reached.
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