The US Dollar gained some value against other majors during yesterday's American trading session. This came as the result of positive US housing market figures. Earlier today the American currency continued yesterday's tendency after the eurozone published weaker-than-expected economic reports. Still, later on, the American currency started losing value and is currently down by 0,04% against a basket of 6 other major currencies. So, the USD index is currently a little bit depressed.
At the same time the Fed's FOMC started a 2-day meeting. Tomorrow, on April 30th, after the FOMC finishes the meeting, the Fed will announce its interest rate decision along with the near-term fate of QE3. Apparently, the market will be looking forward to Janet Yellen's press conference in order to find out whether the Fed is really going to taper its bond purchase program any further. This will be a major driver since traders and investors will definitely take the results of the FOMC meeting into account when defining the near-term prospects of the US Dollar and making their trading/investment decisions.
Meanwhile, experts assume that the Fed is likely to taper QE3 further down to $45bn a month. Therefore, the central banks is expected to cut the bond purchase program by $10bn a month. At the same time, the benchmark interest rate is expected to stay unchanged at 0,25%.
USD Prospects
According to the comprehensive analysis conducted by the experts working for Masterforex-V Academy, the Daily chart of the USD index indicates that the price is consolidating within the scope of the 79,06-81,57 range after a bearish trend, which started at 84,96 and continued down to 79,06.
The consolidation range and the high/low are marked with blue. Today, the index is trading closer to the bottom of the range around 79,69. The downward move is being defended by the MF sloping channel (also blue).
In order to evaluate the mid-term prospects of the US Dollar, we can study the H4 chart. After the bullish reaction move from 79,27 to 80,77, we could witness a sharp drop in the dollar value against other currencies. So, now the index is consolidating within a narrow range between 79,27 and 80,77.
It is likely that the index will stay in the narrow range up until the end of the FOMC meeting. Apparently, market participants have turned risk-averse during the 2-day meeting and are waiting for the results to make up their mind.
If the Fed acts so as to support the US Dollar through further tapering, the index is very likely to start rallying up to 80,06, 80,34. Still the price may encounter resistance around the top of the MF sloping channel on its way to the 80,77 high. This scenario is market with green.
Alternatively, if the US Dollar is going down, the price may well pin through 79,60. Such a break will give way to futher lows - 79,39 and below. IF this is the case, the next target is 79,27, which is the bottom of a winder price range. A break below it will give way to 79,06 and is likely to resume the long-term bearish trend in the market of the USD index. This scenario is market with red.
