US Dollar Index auctions below 102.00 ahead of FOMC minutes, risk-on impulse active

• The DXY has turned extremely bearish as the risk-on impulse has rebounded sharply.
• Investors will keenly watch the release of the FOMC minutes.
• The liquidity absorption program by the Fed has raised recession fears.

The US dollar index (DXY) is looking to extend its losses after violating Tuesday’s low at 101.65 as the soaring market mood has diminished the appeal of the safe-haven assets. The DXY is scaling sharply lower from the past eight trading sessions after failing to hold the 19-year high at 105.00. The weakness in the DXY is backed by the expectations of recession in the US amid an aggressive rate hike cycle.

The market participants are expecting that the Federal Reserve (Fed) has pulled the trigger of recession in the US while containing the inflation mess. The program of liquidity absorption from the market may force the corporate to stick to ultra-filtered investment avenues as the unavailability of dirt-cheap money will result in a restricted investment portfolio.

FOMC Minutes

The show-stopper event on Wednesday will be the release of the Federal Open Market Committee (FOMC) minutes. It will be worth watching the strategic decision-making of Fed policymakers behind the adaptation of the hawkish tone by Fed chair Jerome Powell. Also, the FOMC minutes will provide a clear picture of the economic condition of the US.

Key events this week: Durable Goods Orders, Initial Jobless Claims, Gross Domestic Product (GDP), Core Personal Consumption Expenditure (PCE), and Michigan Consumer Sentiment Index (CSI).

Major Events this week:  FOMC minutes, European Central Bank (ECB)’s Christine Lagarde speech, Reserve Bank of New Zealand (RBNZ) interest rate decision.