Global macro overview for 02/05/2018

The poor liquidity of the Christmas market has undoubtedly helped the dollar bulls to push it higher, but further macro events from the US can still be expected as threating to this rally. Today in the foreground is the finish of the FOMC meeting, although the chances of surprises are small. It is almost certain that interest rates will be maintained at the current level, and the form of communication limited to the statement itself (press conference takes place every second meeting) will narrow the range of signals for the market. It is more likely that the FOMC will feel comfortable with language maintenance regarding the "gradual" pace of tightening, which leaves the gate for the fourth increase in 2018, but is not a declaration. On the other hand, a series of positive data readings from the economy allows to maintain an optimistic tone and translate this into a more hawkish text of the statement, which unofficially will suggest the certainty of another interest rate hike in June. However, with the market valuation of such a scenario at approx. 90%, modifications of the message in this direction should not make a greater impression on investors.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame before the Fed interest rate decision. The USD may not get a strong signal from the Fed, but it does not mean that the fuel for the rally has run out. The turn of the month is a very interesting period, and if it is additionally intertwined with holidays, it only intensifies the "mess." If we assume that the last appreciation is above all the repentance of speculators (who dared to defeat the dollar this year), the dollar is not yet strong with its strength, but it is a strong erasure of a mistakenly perceived weakness. This means that it has the potential to continue its growth if its driving force is to become more and more convinced of its actual strength. The market has broken through 61% Fibo at the level of 91.97 and made a new high at the level of 92.59, which is above the long-term trend line resistance as well. The nearest technical support is seen at the level of 92.00. The clear bearish divergence between the price and the momentum oscillator indicates a possible corrective pull-back to occur soon.