USDX trading activity remains weak, which may be due to the expectation of the results of the vote on the main interest rate of the US Federal Reserve, as well as the following press conference. Let me remind you that the probability of a change in rates is very low, while during the press conference there may be hints of the regulator's readiness to move away from the ultra-soft policy in the foreseeable future. Only in this case, the USDX will receive the necessary support to return above 91.30 and, as a result, to resume the upward movement. Until then, the risk of further weakening of the US currency remains elevated.
This currency pair quotes are squeezed in a relatively narrow price range of 1.2060-1.2090, which indicates a clear uncertainty in the market. All this may be due to caution in anticipation of the announcement of the rate decision and the following press conference of the US Federal Reserve. As a consequence, trading activity may remain low during the European session. Only fixation of the pair above 1.2100 will serve as the first signal showing the willingness of the buyers to continue the growth. Their return under 1.2060 will increase the risk of a deeper decline.
Demand below the technical resistance level 1.3910 remains very weak, with every next low above the previous one, indicating the strength of buyers or weakness of sellers. Accordingly, the likelihood of a strong unidirectional price movement is increasing. It is also important to remember that the pair is still held in a wide sideways 1.3675-1.4000.
The fixation of quotations above 1.3910 will increase the probability of further growth to 1.4000.
The breakout of the resistance zone 108.35-108.55 increases the likelihood of further growth to 109.30. At the same time, the direction of the price movement largely depends on the strength of the USD, which means that the Fed rate decision and the following press conference can have a strong impact on the pair. Return of quotes under 108.35 will cancel the bullish scenario, significantly increasing the risk of further decline in the pair to 107.00.
The above overview is not a direct guide to action, but only a recommendation.