Today at 2:00 PM ET, meeting minutes from the most recent FOMC rate decision will be released to markets. This was, of course, a rate decision that produced no actual rate movements; but given the context of being just a month and a half after the second rate hike of the past 10 years, and also given the Fed’s expectation to hike a full three times in the calendar year of 2017 – and considerable focus was paid in attempting to estimate the Fed’s tolerance for near-term rate hikes.
And while the Fed said nothing affirmative at the time, the net result was a two-week bout of USD-strength that lasted through the first half of February. This ran right in to last week’s Humphrey-Hawkins testimony, which first helped to extend that up-trend into resistance after the first day of testimony, only to bring on a reversal on day two; and this further raised questions as to whether the robust bullish up-trend that started after the Presidential Elections might be ready to continue.
The early part of this week has seen price action re-drive up to resistance just ahead of the release of the Fed’s meeting minutes: And this could give the appearance that the USD trend-of-strength is ready for resumption. But by looking at peripheral markets, there may be something else going on here. Given the lack of excitement in USD/JPY and also given the lack of pressure in Gold and Equity prices –we may not be seeing a legitimate ‘rate hike fears’ theme.
In regards to the Dollar specifically, we’re looking at recent price action below as current prices are remaining above the key level of 101.53. This is the 50% Fibonacci retracement of the January move-lower, and should prices pose a sustained break above this level – the prospect of bullish continuation can look considerably more likely. This is also the level that had helped to reverse prices last week, so this only increases the interest behind this level. But just a little-higher on the chart we have another level of relevance at 101.80, as this is the 61.8% retracement of the 16-year move in the Greenback, taking the high from the year 2001 down to the lows of 2008.
