The USDInd is coiling in a technical pennant pattern as markets brace for potential catalysts from the Fed and US-China trade talks. With support levels under pressure and resistance zones tightening, a breakout appears increasingly likely in the days ahead.
Markets are approaching the upcoming US-China talks with cautious optimism. While no major breakthroughs are expected from this initial round of negotiations, traders are closely watching for any signs of de-escalation or a path forward. This meeting carries extra weight, coming on the heels of President Trump’s April 2 tariff announcement – dubbed “Liberation Day.” Still, there remains considerable uncertainty surrounding the broader trajectory of US trade policy.
Today’s Federal Reserve interest rate decision is another key focus. The Fed is widely expected to hold rates steady in the 4.25–4.50% range. Despite renewed pressure from President Trump calling for rate cuts, most market participants do not anticipate a policy shift at this meeting. A surprise cut would likely spark significant volatility across markets. As it stands, traders have largely priced in the probability of a rate cut occurring in July.
Beyond today’s outcome, the Fed’s tone and forward guidance will be closely scrutinized. Any dovish lean could weigh on yields and the dollar, while a hawkish hold might help preserve support for the greenback. The US Dollar Index (USDInd) will continue to be shaped not only by Fed policy, but also by global investor sentiment, fiscal dynamics, and ongoing trade developments.
From a technical perspective, the dollar is consolidating within a tight pennant formation that has developed over the past three weeks. Price is currently sitting in the support zone of the pattern, having made three distinct touches within the structure. While at least two more touches are anticipated before a potential breakout, the setup suggests growing pressure for a decisive move.
Notably, the 21-day simple moving average (SMA) has served as dynamic resistance on two of the last five trading days—underscoring overhead resistance in the near term.
For bullish USD Index (USDInd) scenarios, the following resistance zones are in focus:
For bearish outlooks, key support levels include:
A breakout from the current range appears imminent.
Both the Fed decision and trade policy signals could serve as catalysts. Tactical positioning and risk management will be essential as markets navigate this pivotal zone.