The beginning of the year wasn't too good for all US Dollar bulls as there was not much left for the USD sell-off at the start of the new year, but ultimately it was stopped due to a strong rebound in the US Treasury yield. On such a background, it will be interesting how the market will respond to the US data. The ISM Manufacturing PMI is expected to sustain the November level of 58.2 points. Yesterday, readings from China and Europe showed that the global economy is doing very well, and the regional business climate indicators from the US give hope for a strong reading this afternoon. The problem is that the market has recently limited its reaction to inflation and wage data only. Hence, even an impressive result can bring moderate satisfaction. Later in the day, the minutes from the FOMC meeting may reveal what the Fed is planning to do about the rate of increase. From the statement and conference after the December meeting, we learned that despite the revision of GDP forecasts after tax reform, the Fed still sees room for only three interest rate hikes in 2018. If the notes indicate that the Fed is leaning to pause (or postponing the next step) in anticipation of inflation rebound, it will be a dovish signal. On the other hand, remembering that the market for the FOMC decision reacted quite dovish, it is unrealistic to discount the same for the second time.
Let's now take a look at the US Dollar Index technical picture on the H4 time frame before the FOMC Meeting Minutes release. The market has made a local low at the level of 91.75 and now is trying to rebound higher. The nearest technical resistance is seen at the level of 92.49 and if we take into the account that the market conditions are extremely oversold, then it is quite possible for this level to be tested soon.
