• DXY extend the knee-jerk to the proximity of 101.00.
• Further recovery targets the 102.60 zone.

DXY remains on the defensive and adds to Tuesday’s pullback ahead of the FOMC event on Wednesday.

Ideally, the index should clear the 102.60 zone, where the provisional 55-day sits, to alleviate the downside pressure and allow a potential test of the July high in the mid-103.00s, seconded by the key 200-day SMA at 103.89.

Looking at the broader picture, while below the 200-day SMA, the outlook for the index is expected to remain negative.

DXY daily chart