Dollar Index is trading up 0.23% at 106.59

The dollar held onto gains against other major currencies on Wednesday, ahead of the release of minutes of the U.S. Federal Reserve’s July meeting that could give further clues about the pace of further interest rate hikes.

The greenback has recovered the ground it lost since softer-than-expected inflation data last week led to investor bets that price rises may have peaked, weakening the dollar.

“The question is whether the Fed wants to use these minutes as a communication tool to push back against the view of a 2023 easing cycle,” ING currency analysts said in a note.

Several Fed officials have signalled over the past week that the central bank will still act decisively to combat inflation, helping lift the dollar back up.

U.S. retail sales data due later on Wednesday will also be watched closely as an indicator of the economy’s resilience.

The dollar index was last up 0.1% on the day at 106.600. It has recovered by around 2% since last week’s post-inflation data low, but remains more than 2% off the two-decade high of 109.29 hit in mid-July.

The euro was broadly unchanged versus the dollar at $1.01730, after revised official data showed euro zone economic growth was slightly less robust in the second quarter than previously estimated.

On technical fronts Dollar Index RSI stood at 56.14 and currently it is trading above all MA. So, BUY position can be taken with following target and stoploss:

TRADE SIGNAL – : Dollar Index – BUY: 106.59, TARGET: 107.17, STOP LOSS : 106.16