Will DXY consolidate post FOMC minutes?
The dollar index has continued its uptrend despite the mixed US jobs data. The rally is on hopes that US Federal Reserve's June policy meeting minutes will be hawkish and may indicate the timing of tapering the quantitative easing. Tonight's FOMC minutes are the highlight, with the focus on the dot plots in the meeting to get more clearer picture of how serious members were about tapering the asset buying and how early hikes could begin. The recent US jobs report and the services PMI has disappointed some Fed hawks. The US nonfarm payrolls data beat the market forecasts, but unemployment rate ticked higher and workforce participation didn't budge with the pace of hourly earnings growth slowing. So, the mixed US jobs report didn't make anything clearer for fx traders, signaling that the economic recovery remained intact but also suggesting that the Federal Reserve interest rate hike could be further away than what fx traders have forecasted. While, the services PMI continued to expand in June, but at a softer pace than it did in May. So the minutes will be watched closely for fresh impulse by the DXY bulls and to gauge the divide among the Federal Reserve policymakers to justify the market's hopes of monetary policy consolidation. If the minutes suggest a hawkish stance then we may see the DXY to rally further. Overall, the fx market is volatile ahead of the minutes on hopes that it may indicate the timing of tapering the quantitative easing. If the minutes delay tapering due to the risks of the economic outlook, then the disappointment will lead to a reversal DXY. As seen in the weekly chart, US dollar index (DXY) had witnessed a rally to hit almost a three months high of 92.741 and is currently hovering around 92.50. The immediate crucial top-to-top trend line resistance lies at 92.75 above which strong resistance is at 93.50. Only sustenance above 93.50 will lead to further bullishness in DXY. On downside, support is located at 91.75-91.50 zone and consistent trading below which only next key support is observed at 90.80-90.45.