The U.S. Index in front of the FOMC minutes release.
Buyers seemed poised to make a run at 79.00 as prices rallied all Monday. Prices rallied as buyers supported 78.20 and paused after the London close just below 78.80. Both these prices levels were minor psychological levels. The Asian session rallied the dollar again but ran out of steam as prices topped out at 78.87-78.89.
The resistance at this level — while short of the key 79.00 level — showed that the sellers were simply waiting for a worthy bounce to short the U.S. Dollar again. This action is interesting as it all is occurring in front of the 2:00pm EST FOMC minutes release.
Prices are currently sitting on yet another psychological level at 78.50 and this is likely to be support going into the London close. The dollar as it trades on the daily chart is merely correcting within the overall downtrend and certainly is not near the 79.50 level that could begin the discussion of a possible reversal.
The 30 minute chart of the dollar shows the near term support at 78.50 and if this level is broken expect prices to re-visit the 78.20 low. This low was set during last Friday’s Non-Farm Payroll which further begs the question: What are dollar traders thinking about future interest rate decisions andinflation. It is widely expected that Bernanke will shift focus to protecting the dollar and this means that the rate cuts are done.