In yesterday’s dollar technical outlook ahead of the FOMC minutes, one scenario put forth was sell the rumor, buy the fact. The dollar came into today’s FOMC minutes limping along on Fed chair nominee Janet Yellen’s crusade for further quantitative easing.
The minutes statement indicated that the Federal Reserve, as a whole, acknowledge that a taper in quantitative easing could come in the next few months. However, they are still stuck on how to keep rates low as the massive monetary easing program begins to die off.
Unfortunately, this minutes release was confusing because the Fed seemed confused on possible routes of action if the labor market and economy did not improve and current measures loose what little effectiveness they previously had, outside raging equities and home prices.
The dollar stopped short of the 81.31 in the topside forecast, reaching a high of 81.20. Some selling is evident at the top of the range, but it will be important on preceding candles in order to see if the dollar has been given a shot of adrenaline. A pullback to 80.90 is possible with price action support.
If bulls fight the selling at the top, potential upside to 81.31 and the 200 EMA has a strong case. Although, a descending trend line will provide resistance at these levels. If upside momentum, given the Fed and ECB news, continues, the dollar can further gains to 81.55 and 81.91.
Downside can be seen at 80.90 and 80.76.