All eyes were on the FOMC statement today, and only few economic figures were released from Europe this morning.

In Germany, GFK consumer confidence rose slightly to 9.4 against 9.3 estimated. While in the UK, Nationwide house PX MoM fell to 0.3% in January down from 0.8% previously.

In the meantime, the BBA loans for house purchase came out less than expected at 43975 in December compared to 45500 expected.

In the U.S, MBA mortgage applications slid to 8.8% down from 9.0% earlier. In addition, the new home sales jumped to 544K during last month above estimates of 500K.

Few hours later, the FOMC decided to maintain interest rates unchanged. Given the economic outlook, the Committee decided to maintain the target range for the federal funds rate at 0.25% to 0.50% percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

The Dollar index traded sideways since the beginning of the year, as market participants remain skeptical about the pace of the future rate increases by the FED.

Technically, the DXY is Bullish in the biggest time frames and should edge higher in the coming days as far as 97.20 low is in place.

In the near-term, 98.15 level represent the bullish pivot in the hourly chart, and we expect the index to find strong support between 99.00 and 98.80 levels as it coincide with the 50-61.8% Fibonacci retracement  of the recent recovery from January lows.

Consequently, traders should be careful from chasing weakness from the current levels, as we believe that the last drop is corrective only.

However, we prefer to wait for the Dollar index to bounce from the mentioned above support zone and we will wait for a daily close above 99.30 resistance level, in order to confirm that the current correction has ended and the index is ready for another leg higher.

In the opposite, if we see a breakdown below 98.15 in a daily basis, then this correction is likely to extend.

To conclude, we can see that the higher highs/higher lows structure from 97.20 low remain intact, and consequently the Bullish trend is likely to persist until we see clear signs of a trend reversal. 

 

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