US Dollar struggles for direction near 96.00, FOMC eyed

After three consecutive daily gains, the greenback – in terms of the US Dollar Index – is now marginally lower vs. its rival currencies, hovering over the 96.00 handle.

US Dollar focus on FOMC

The index could not sustain yesterday’s brief breakout of the 96.00 handle, returning to the 96.00/95.90 band early in the European morning while markets’ attention remain on the FOMC minutes, expected later in the day.

Investors will closely follow the details behind the Committee’s decision to hike rates last month, while extra attention should be on the Fed’s plans to start reducing its balance sheet as well as the probability of another rate hike at some point in Q4.

In view of CME Group’s FedWatch tool, the probability of higher rates in December is just above 50%, based on Fed Funds futures prices.

In the meantime, headlines from North Korea and the UN emergency meeting (at 19GMT) appear poised to drive the sentiment today, while the US data space will only see the publication of May’s factory orders.

US Dollar relevant levels

The index is losing 0.09% at 95.90 facing the next support at 95.22 (2017 low Jun.30) followed by 94.95 (low Sep.22 2016) and finally 94.05 (low Aug.18 2016). On the other hand, a break above 96.09 (high Jul.4) would target 96.19 (10-day sma) and then 96.68 (21-day sma).