US Dollar Index under pressure around 99.60 ahead of FOMC

• DXY keeps the downbeat mood near 99.60 ahead of Fed.
• US advanced Q1 GDP contracted 4.8%, missing consensus.
• The FOMC meeting is coming up next later in the NA session.

The US Dollar Index (DXY), which gauges the greenback vs. a basket of its main competitors, stays under pressure around the 99.60/50 band ahead of the FOMC event.

US Dollar Index offered on data, looks to FOMC

The index is down for the fourth consecutive day so far on Wednesday, coming under renewed downside pressure following last week’s failure to break above the 101.00 mark, which is acting as quite a tough barrier this month.

The better mood in the risk complex plus month-end flows have been also weighing on the buck as of late, particularly following encouraging news that the coronavirus outbreak continues to ebb in Europe.

In the US data space, preliminary readings showed the US economy is expected to contract at an annualized 4.8% during the January-March period, more than the 4.0% contraction initially predicted.

Still in the US, Pending Home Sales are next on tap seconded by the EIA’s weekly report on crude oil supplies. The FOMC gathering will close the daily calendar with no moves on rates although investors’ attention remains on any hint of changes to the fed’s forward guidance in light of the ongoing coronavirus crisis.

What to look for around USD

The dollar’s rally lost momentum once again in the vicinity of 101.00, where sellers re-emerged and dragged DXY back to the area below the 100.00 mark. In the meantime, all the attention remains on the coronavirus developments against the backdrop of increasing efforts by the country to re-open the economy, albeit at a gradual pace. On the supportive side of the dollar remains its status of “global reserve currency”, store of value and the investors’ preference when comes to seek refuge amidst financial stress. In the very near-term, the Fed’s forward guidance should remain on top of the debate at the FOMC event later on Wednesday.

US Dollar Index relevant levels

At the moment, the index is losing 0.36% at 99.60 and faces the next support at 99.45 (weekly low Apr.28) followed by 99.30 (55-day SMA) and then 98.82 (monthly low Apr.15). On the upside, a break above 100.49 (78.6% Fibo of the 2017-2018 drop) would aim for 100.93 (weekly/monthly high Apr.6) and finally 101.34 (monthly high Apr.10 2017).