US Dollar declining ahead of FOMC decision

• US Dollar has declined ahead of today's FOMC decision.
• Consensus expects a 25 bps cut, but some analysts predict a larger 50 bps cut.
• Fed's Dot Plot will be closely watched, as they are expected to show a dovish shift.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, has declined ahead of today's Federal Open Market Committee (FOMC) decision. Market consensus anticipates a 25-basis-point (bps) rate cut, although some analysts predict a larger 50 bps reduction. The Fed's Dot Plot, which outlines the FOMC members' projections for future interest rate movements, will be closely scrutinized for any signs of a dovish shift.

The pricing of the markets of a 50 bps cut seems unrealistic as, despite weakness in the labor market, the overall economy is showing resilience.

Daily digest market movers: US Dollar remains soft ahead of FOMC

• US Dollar remained weak ahead of the FOMC meeting, with the market pricing in a nearly 70% chance of a 50 bps rate cut.
• FOMC is expected to cut rates by 25 bp, but a 50 bp cut is also possible.
• New Dot Plot will be closely watched for signs of a dovish shift in the Fed's policy outlook.
• US Dollar is likely to weaken if the Fed cuts rates by 50 bps and signals a more dovish stance.
• Powell's presser will also be closely followed for further clues.

DXY technical outlook: DXY indicators suggest a negative outlook

Technical analysis of the DXY index suggests a negative outlook, with indicators remaining in negative territory. In addition, the loss of the 20-day Simple Moving Average (SMA) indicates a fading buying momentum.

The Relative Strength Index (RSI) is pointing downwards and remains below 50, indicating bearish sentiment. The Moving Average Convergence Divergence (MACD) is printing lower green bars, further supporting the bearish trend. Supports are identified at 100.50, 100.30 and 100.00, while resistance levels lie at 101.00, 101.30 and 101.60.