In this article, we will share our view for the DXY ahead of the June FED decision on interest rates.
On the monthly DXY chart, it is visible that the instrument is testing a strong upside resistance 95.06 level for the upside continuation. Rejection form here could lead to an extension lower into the 92.50 support. It is important to note that the FED meeting could make the break above the 95.00 level possible and could speed up then and upside extension into the 98-100 zone.
We have used for this article our top-down trading analysis
The daily $DXY chart is revealing the same key support zone marking the 93.20 important near-term for the upside bounce and extension higher. Looking at this chart a pullback into the 91.5-92 zone is not excluded. This is a long-term reaction zone for the instrument. As stated looking from a monthly chart, the break above 95 level would mark an upside continuation.
The daily chart of the US 10 Yr treasury yield is showing us the positive correlation with the DXY upside swing. The 3.00 level is important for the treasury yields as for the DXY is 95 level. The support for the 10 Yr yields is 2.86 level. This level needs to hold for the upside swing into the 3.00 level to be materialized.
It is always important for the traders to wait for the important high impact announcement to pass before taking action. Looking at this extremely important 95 level as an overhead resistance in DXY this rule and patience of traders is now the most important for a June interest rate FED decision. Based on a DXY move take the trades possibly one hour after the announcement or even tomorrow to see a daily candle closes.
Happy trading! (click on the chart to enlarge it)
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