US Dollar Slightly Higher Ahead of May’s FOMC Minutes

The US Dollar Index (DXY) is currently trading near 104.80, showing minor gains during Wednesday’s American session. Despite soft inflation data reported last week, the Greenback remains resilient, thanks to cautious statements from Federal Reserve (Fed) officials.

The upcoming release of the FOMC Minutes is crucial for investors seeking insights into the Fed’s stance. Overall, the US economy continues to experience consistent growth, even as labor and inflation figures soften. The hawkish tone from Fed officials suggests that rate cuts are unlikely in the near future, which supports the USD.

What to Expect from FOMC Minutes:

The FOMC Minutes, covering the late April to early May policy meeting, will be released on Wednesday at 18:00 GMT.

The CME FedWatch Tool indicates no expectation of a rate cut in June or July, but there is a 37% chance of maintaining the current policy in September.

The FOMC Minutes are expected to reveal that the Fed requires more evidence of inflation cooling down, potentially benefiting the USD.

DXY Technical Analysis:

The DXY’s Relative Strength Index (RSI) remains flat, positioned in negative territory, suggesting that sellers may have already done most of their work.
The Moving Average Convergence Divergence (MACD) shows a flat red bar histogram, further confirming the near-term bearish sentiment. The index has recently fallen below the 20-day Simple Moving Averages (SMA), indicating mounting selling pressure in the short term.

However, the Dollar Index remains above the critical 100 and 200-day SMAs, implying that bulls still maintain control. In summary, while conflicting signals persist, the USD’s overall position remains relatively stable, with both bullish and bearish factors at play.