Current trend

During the Asian session, the American dollar index USDX is developing an upward trend, renewing the highs of May 9. However, trading activity remains reduced, as investors are waiting for the publication of key macroeconomic statistics at 14:30 (GMT 2) and the results of the two-day meeting of the US Fed on monetary policy at 20:00 (GMT 2).

Analysts have little doubt that the regulator’s officials will leave the interest rate at 5.5%. Investors focus on the renewed forecasts for the cost of borrowing this year (dot pot), which may determine the further dynamics of the American dollar. Now, experts consider a one or two-fold reduction in the indicator by 25 basis points. Also, there is a possibility that economists will keep the monetary policy unchanged, given the stability of the national economy. The probability of a transition to the “dovish” course in September has significantly decreased after the positive report on the labor market. The May nonfarm payrolls increased from 165.0K to 272.0K, above expectations of 185.0K, and average hourly earnings accelerated from 4.0% to 4.1%, contrary to forecasts of 3.9% YoY and from 0.2% to 0.4% MoM, above preliminary estimates of 0.3%.

Support and resistance

On the daily chart, Bollinger bands are trying to reverse. The price range is expanding, but not as fast as the “bullish” activity develops. The MACD indicator is growing, maintaining a buy signal (the histogram is above the signal line). Stochastic, approaching the highs, is directed horizontally, signaling that the trading instrument may become overbought in the ultra-short term. 

Resistance levels: 105.40, 105.58, 105.82, 106.26.

Support levels: 105.20, 105.00, 104.70, 104.24.

Trading tips

Long positions may be opened after a breakout of 105.40, with the target at 105.82. Stop loss — 105.20. Implementation period: 1–2 days.

Short positions may be opened after a breakdown of 105.00, with the target at 104.70. Stop loss — 105.20.