The US dollar index bounced slightly overnight ahead of the FOCM rate decision. There are expectations that the Fed will continue to signal further monetary tightening when it keeps rates steady at the end of the FOMC meeting later today at 2:00 pm ET. These expectations are probably helping the US dollar to stay flat during today's trading session. Additionally, the market is taking a breath after the US midterm election results pushed the US dollar lower in yesterday session.
Prospects of political gridlock from a split Congress and the removal of uncertainty was not good yesterday for the Greenback, because additional fiscal stimulus might be more unlikely and it keeps the Fed rates on a gradual path as opposed to faster rates hikes.
For now, a split Congress in the US looks like a good outcome for global equity markets, and it may ease trade war tensions. The S&P 500, Nasdaq and Russell 2000 rallied 1.12%, 2.64%, and 1.67% respectively in yesterday’s session.
The technical levels to consider for today for the US dollar index are within a narrow range in the morning, and then a much wider range after 2:00 pm ET; the levels we are expecting for today’s session are 95.68 on the downside and 96.40 on the upside. The technical levels to consider for today in the USD/CAD are 1.3050 on the downside and 1.3150 on the upside.