The US dollar is facing difficulties in gaining momentum as investors predict that the Federal Reserve may soon pause its rate hike plans.

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• The USD struggles to gain any traction amid bets for an imminent Fed rate hike pause.

The pair currently trades last at 103.26.

The previous day high was 103.64 while the previous day low was 103.05. The daily 38.2% Fib levels comes at 103.27, expected to provide resistance. Similarly, the daily 61.8% fib level is at 103.42, expected to provide resistance.

The US Dollar (USD) struggles to capitalize on the overnight modest bounce from its lowest level since May 17 and remains on the defensive through the Asian session on Wednesday. The USD Index (DXY), which tracks the Greenback against a basket of currencies, hovers around the 102.80 region, down over 0.10% for the day, as traders keenly await the outcome of the highly-anticipated FOMC monetary policy meeting.

The Federal Reserve (Fed) is scheduled to announce its decision at 18:00 GMT this Wednesday and is widely expected to skip raising interest rates. The bets were lifted by the latest US consumer inflation figures released on Tuesday, which showed that the headline CPI barely rose in May and the annual increase was the smallest since March 2021. This, in turn, is seen as a key factor that keeps the USD bulls on the defensive, though the downside seems limited heading into the key central bank event risk.

Given that the year-on-year inflation rate is still well above the 2% target, the Fed might still opt to stick to its hawkish stance. Moreover, the markets have been pricing in a greater chance of another 25 bps lift-off at the July FOMC policy meeting. This had led to the overnight sharp spike in the US Treasury bond yields, which, along with a modest downfall in the US equity futures, is holding back traders from placing aggressive bearish bets around the safe-haven Greenback and limiting any further losses.

Apart from the crucial FOMC decision, investors will closely scrutinize Fed Chair Jerome Powell’s comments at the post-meeting press conference for clues about the future rate-hike path. This, in turn, will play a key role in influencing the near-term USD price dynamics and help investors to determine the next leg of a directional move. In the meantime, Wednesday’s release of the US Producer Price Index (PPI) might provide some impetus to the USD later during the early North American session.

Technical Levels: Supports and Resistances

EURUSD currently trading at 103.26 at the time of writing. Pair opened at 103.29 and is trading with a change of -0.03 % .

The pair is trading below its 20 Daily moving average @ 103.75, above its 50 Daily moving average @ 102.58 , above its 100 Daily moving average @ 103.03 and below its 200 Daily moving average @ 105.2

The previous day high was 103.64 while the previous day low was 103.05. The daily 38.2% Fib levels comes at 103.27, expected to provide resistance. Similarly, the daily 61.8% fib level is at 103.42, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 103.01, 102.73, 102.41
• Pivot resistance is noted at 103.61, 103.93, 104.21

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