US Dollar Bullish As Tech Pulls Back Ahead of Fed

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We saw another fresh sell-off in technology stocks yesterday, which pushed the broader stock market lower. It looks like there is some uncertainty ahead of tomorrow’s Fed interest rate decision. As you know, there is a chance that the Fed could sound a bit more hawkish after rebounded from 68 to above 90 earlier this month. That could obviously put more pressure on inflation, and if market participants expect a hawkish outcome, they may continue reducing risk, at least in the short term.

This is also one of the reasons why the remains strong and is still expected to take out the June highs, although maybe not immediately. Keep in mind that there is still room for a more complex consolidation, and another test of the 100.80 area would be perfectly normal. Market conditions and trading volumes often slow down ahead of a Fed decision.

Overall, we still think the US dollar will move higher sooner or later. The only question is whether we first see another intraday pullback. If so, then 100.80 and 100.60 are the key support levels to watch.