A Look at DXY Ahead of the FOMC Statement

Ahead of the FOMC statement at 2 PM ET, is the position or behavior of the U.S. Dollar telling us anything in particular about the likely reaction to the Fed?

If we overlay the chart pattern on the prospect of a Fed-rate hike sooner than later, or an intensification of rate-hike rhetoric emerging from the meeting, it seems extremely curious to me that the big picture of the The Dollar Index (DXY) for all of 2015 so far appears to have carved out a distribution top formation-- precisely during the timeframe of less accommodative rhetoric emanating from the Fed.

More specifically, however, the most recent upleg in DXY from 93.56 (June 18) to 98.15 (July 21) has the right look of a completed recovery rally within the larger topping process, which if accurate, means that DXY has unfinished business on the downside that should break key, up-trendline support at 95.15 in route to another critical test of the up-sloping 200-Day EMA, now at 93.40.

And if such a scenario emerges, then wouldn't that imply that the Fed in some way, shape, or form will convey less intensity about raising rates during 2015?

We shall soon find out.

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