US Dollar index eyes 80.00 after FOMC

New York (Oct 30)  The US Dollar Index, which tracks the greenback against its major competitors, has been catapulted to multi-day highs near the psychological mark at 80.00.

DXY boosted by Fed

The Fed caught markets off-guard once again, as consensus was expecting a dovish-to-neutral tone from today’s meeting, resulting in totally the opposite. The Fed saw economic improvement despite the recent fiscal developments, although it said that more data is needed before start scaling back its monthly bond buying. The Fed also left intact both the benchmark rate and the asset purchases at 0.25% and $85 billion, respectively. James Knightley, Analyst at ING, commented, “Then, in January, we enter the handover period between Ben Bernanke and Janet Yellen, which may not be the ideal timing at which to make such a major shift in policy. Consequently, we may well be looking at March as the earliest possible date for a slow and steady start to the taper”.

DXY key levels

The index is now up 0.26% at 79.83 and a surpass of 80.18 (high Oct.4) would expose 80.64 (high Sep.26) and finally 80.75 (high oct.16). On the downside, the initial support lines up at 79.13 (low Oct.23) followed by 78.93 (low Feb.1) and then 78.60 (Sep.14 2012).