The US Dollar Index is a bit stronger than the previous days but traders need to be very cautious today as we expect volatility to rise after the FOMC meeting tonight. The US Dollar Index is trading right above the short-term support. I prefer to be neutral during the days like this and wait for an opportunity to take a position after the FOMC meeting.

Black lines - bullish channel

The US Dollar Index is trading right on top of the lower boundary of the bullish channel. The index is also trading below the Ichimoku cloud. Yesterday, it tried to enter the cloud, reached the kijun-sen (yellow indicator), and got rejected. The price pulled back towards the lower boundary again and now we see another bounce towards the cloud. USDX is also trading around the 38% Fibonacci support. With the FOMC meeting tonight we will see a breakout of the support or a strong upward bounce. The levels to watch for are 96.30 and 97.65.

The US Dollar Index is trading below the kijun-sen (yellow indicator). Next support is seen at 95.85 at the tenkan-sen (red indicator). The price is in danger of making a false breakout and a deeper correction towards the Ichimoku cloud support at 90. I would expect things to clear up tonight.