GBP/USD bulls are attempting a correction from an important support area near the midpoint of the 1.1400 area, with the price recovering from a low of 1.1462 and now testing the bear’s commitments at 1.1500.Ressitance
US Dollar Index grinds higher around multi-year top after rising the most in a week.
Strong yields, geopolitical fears underpin the US dollar’s run-up.
Chatters over a surprise 1.0% rate hike also favor bullish momentum.
Two-month-old resistance line gains attention as 21-DMA restricts short-term downside.
Dollar is current in the driving seat, as lifted by extended rally in treasury yield. 10-year yield is trading up above 3.5 handle for the first time in more than a decade. Swiss Franc and Yen are steady on risk aversion. But Sterling is more resilient with help from buying against Euro.
US Dollar Index (DXY) gears up for another hawkish play of the Fed during Wednesday, taking rounds to 110.30 after rising the most in a week to the recently flashed two-decade high the previous day. In addition to the pre-Fed anxiety and the hawkish calls for the US central bank decision, geopolitical headlines and strong yields also underpin the strength of the greenback gauge versus the six major currencies.
“The Fed started a two-day meeting on Tuesday, with rate futures traders pricing in an 83% chance of a 75 basis-point hike and a 17% probability of a 100 bps of tightening,” said Reuters. The news joins increasing calls for a positive surprise to add strength to the DXY. The global economist Nouriel Roubini joined the league of supporters for the Fed’s 1.0% rate hike and favoured the US dollar bulls.