Dollar Drops On Profit Taking Ahead Of FOMC Meeting?????? ??? ??? ????
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Today’s Spotlight Market
Speculators appear to have jumped full-on the Dollar bull market bandwagon, at least according to the most recent Commitment of Traders report. For the week ending March 10, non-commercial and non-reportable traders were holding a combined net-long position in the Dollar Index futures totaling a whopping 99,210 contracts. For the reporting period alone the speculative net long position increased by over 13,500 contracts. Commercial hedgers are on the other side of this trade with a total net-short position of nearly 99,800 contracts.
Fundamentals
The U.S. Dollar has been a bullish dream so far in 2015 as the ?greenback? has posted gains of nearly 12% vs. the Euro this year. However, profit-taking selling emerged to start the week as weak longs were busy covering their positions ahead of this week?s Federal Open Market Committee (FOMC) meeting that concludes this morning. Once again the ?devil will be in the details? of the statement to be released following the meeting, as analysts scour for any changes in the wording from previous meetings. This time the ?key? word appears to be ?patient? in the context that the Fed will be ?patient? before signaling a rise in rates. Chairwoman Janet Yellen has in the past stated that being ?patient? meant waiting at least 2 FOMC meetings prior to adjusting rates upward. However, it is likely that the Fed will attempt to elaborate that it remains? data dependent? and will be flexible in determining the timing of any interest rate hike depending on how it views the performance of the labor market, as well as its projection for rising inflationary wage pressures which have generally been absent, despite the continued decline in the unemployment rate.
Technical Notes? -? View Today’s Chart
Looking at the weekly continuation chart for the Dollar Index future, we notice a rather ?parabolic? move upward starting in the 4th quarter of 2014. Since this major bull market move began, there have been only two minor consolidations/corrections, despite a nearly 20-full point up move. The 14-week high is well into overbought territory with a current reading of 82.77. The next resistance level is seen at the March 2003 high of 102.68, with support seen at the February low of 93.38.
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