USD Index: Key Levels on 4th May 2022

In today's policy meeting, the Federal Open Market Committee hiked interest rate by 50 basis points, as predicted. More hikes of 50 basis points are predicted in the coming months.

The Committee also revealed plans to begin shrinking the Fed's balance sheet, which stands at $8.9 trillion at the moment. For the next three months, the Federal Reserve will let up to $30 billion in Treasury securities to roll off its balance sheet, starting on June 1.

The Fed Chair was optimistic about the economy's long-term viability. The labor market is solid, consumers have plenty of cash on hand, and businesses are doing well. As a result, the US economy should be able to withstand higher policy rates without entering a recession.

Based on FOMC’s policy, the fundamentals remain bullish for the USD.

DXY Technical Analysis:

The trend remains bullish and there are no signs against asper the weekly and daily timeframes.

On the daily it’s moving within the rising channel and has reached the upper boundary which also coincides with Fib resistance level at 103.45

Expecting a short- term pullback with the important support at 102.40/101.50 & 100.75

Based on the projections with the Fib levels and rising channel the upside target is 105.90-106.20