The Fed will release the minutes of the March policy meeting at 18:00 GMT on Wednesday. Although investors are likely to pay close attention to this publication, its impact on the USD’s valuation could remain limited because the BLS will release the Consumer Price Index (CPI) data for March earlier in the day, which is likely to have a more significant effect on the market pricing of the Fed’s policy outlook.
Nevertheless, in case the FOMC Minutes show that some policymakers remain optimistic about the inflation outlook and still favor a rate cut in June regardless of the stronger-than-expected CPI data for January and February, the USD could face some bearish pressure. On the other hand, the USD is likely to gather strength against its rivals with the immediate reaction if the publication suggests that officials are likely to delay a rate cut as long as labor market conditions remain tight.
Eren Sengezer, European Session Lead Analyst, shares a brief technical outlook for the USD Index:
“The 200-day Simple Moving Average (SMA) aligns as key support for the USD Index (DXY) at 103.80. In case the index falls below that level and starts using it as resistance, 103.40 (100-day SMA) could be seen as next support before 102.35 (March 8 low). On the upside, the Fibonacci 61.8% retracement of the October-December downtrend aligns as first resistance at 104.70 before 105.00 (static level) and 105.80 (Fibonacci 78.6% retracement).”
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