The US Dollar Index (DXY) dipped slightly on Wednesday, currently trading at 106.2, ahead of the crucial Federal Open Market Committee (FOMC) meeting.

Mixed US Data Offers No Clear Direction

• Earlier economic data painted a mixed picture, with weak Manufacturing PMI data but positive private-sector job growth.
• The picture suggests a potentially slowing US economy, but persistent inflation could still influence the Fed’s decision.

Fed Decision in Focus: Hawkish Hold Expected

• The market expects the Fed to maintain interest rates but adopt a hawkish stance due to inflation concerns.
• This could lead investors to adjust their expectations for future rate cuts, impacting the Dollar.
• Chair Powell’s press conference will be closely watched for any hints about the timing of future rate adjustments.

Technical Analysis: DXY Awaits Direction

• DXY’s technical indicators present mixed signals.
• The RSI suggests potential downside pressure, but the MACD remains flat.
• The DXY remains above its key SMAs, indicating underlying buying support.