The DXY is trading back in the range 95.60 / 96.60 in risk off markets and the prospect of a FED announcing a rate hike in march at tomorrows meeting. In the previous sell off the long positioning has dimineshed of course what helped the Index to run higher again.
There are some people who argue for a possible 50 Bp rate hike but I do not think that this will materialize. An increase of 25 Bp seems more realistic to me combined with some “watch and see” rhetoric. In this respect the market could be somewhat too hawkish. Anyway the Dollar is neutral at these levels and could easily run higher with less longs in the market.
With a stronger Dollar the currency pair EURUSD is approaching the bigger 1.1273 support level again. Trading below the green ascending trendline (weak support) and 70 pips away from the 50 ema (1.1368) the bias is still to the downside. As I have mentioned several times I am still waiting for a final sell off. On a weekly chart you can see that 1.1175 is a crucial level.
Good luck,
Sebbo