US Dollar stands flat as market awaits FOMC Minutes

• The US Dollar Index shows some weakness ahead of FOMC Minutes from the January meeting with a slight decline to 104.00.
• The Fed's intention to keep rates untouched may fuel further gains for the US Dollar.

The US Dollar Index (DXY) experienced a slight setback, resting at 104.00 in Wednesday’s session. 

The US economy, backed by robust data, shows resilience, reflected in the strength of the Greenback in 2024. Meanwhile, the Federal Reserve (Fed) maintains a hawkish stance, dismissive of near-term rate cuts and keen on keeping rates at restrictive levels. The market aligns progressively with this view, reinforcing expectations of a delayed easing cycle. 

Daily digest market movers: The US Dollar struggles to gain ground as investors look for drivers in the FOMC minutes

• The market’s highlight will be the release of the Federal Open Market Committee (FOMC) Minutes from the last January meeting at 19:00 GMT, which may fuel volatility in the next Fed decision expectations.
• As for now, the CME FedWatch Tool indicates a 20% chance of a rate cut at the next meeting in March and also remains low for May, reflecting the market sentiment leaning toward the Fed's intent to hold rates steady at restrictive levels. 
• Markets are now pushing the start of the interest rate easing to June.

Technical analysis: DXY bulls stand weak and must recover the 100-day SMA

The indicators on the daily chart reflect a balance between buying and selling pressure. The Relative Strength Index (RSI) is in positive territory, but its negative slope suggests that buying momentum is losing steam. The Moving Average Convergence Divergence (MACD), with its decreasing green bars, implies that any bullish momentum is weakening and could potentially flip into a bearish bias.

Furthermore, the positioning of the index compared with its Simple Moving Averages (SMAs) provides an interesting perspective. Despite the bearish pressure, bulls have managed to keep the DXY above the 20-day and 200-day SMAs. This suggests that buyers continue to wield some strength in the broader time horizon.

However, the Dollar Index being below the 100-day SMA may hint at intermediate barriers for bullish movements. Hence, while the broader trend might still be inclined toward buyers, the short-term outlook presents a battle for control between bulls and bears.