US Dollar stands neutral following low-tier data, FOMC meeting kicks off

• The DXY Index trades with a neutral bias near 103.50.
• Wednesday’s FOMC decision and labor market data will play a pivotal role.
• Low tier data including labor, housing and consumer confidence figures came in mixed.

The US Dollar (USD) Index holds steady near 103.50 on Tuesday, showing a neutral posture after the release of low-tier data. The two-day Federal Reserve (Fed) meeting kicked off on Tuesday and ends on Wednesday with a press conference from Fed Chair Jerome Powell. This makes the markets turn cautious, lending some support to the USD.

Market anticipation regarding the Fed's future decisions are shifting but remain restrained due to robust recent economic data, suggesting that earlier rate cuts are unlikely. The upcoming FOMC decision and jobs data are expected to further steer market sentiment and shape the easing cycle from the Fed.

Daily Digest Market Movers: US Dollar holds its ground as markets digest low tier data ahead of Fed’s decision

• According to the US Bureau of Labor Statistics, JOLTs Job Openings for December came in at 9.026M, slightly above the consensus of 8.75M but below November's 8.925M. 
• The Conference Board reported a dip in its Consumer Confidence Index, with a January standing of 114.8 compared to 115 projected and the previous 108. 
• The S&P Case-Shiller Home Price for November fell -0.2% MoM against a 0.1% gain in the prior period. On a yearly basis, it had an increase of 5.4%, lower than the expected 5.8% but up from previous 4.9%.
• Market's perspective on the Federal Reserve's next move, as gauged by the CME FedWatch Tool, suggest that investors are confident that the bank won’t change its policy on Wednesday. As for now, markets are seeing the easing cycle starting in May.

Technical Analysis: DXY bulls defend the 200-day SMA, further downside on the horizon if lost

On the daily chart, the Relative Strength Index (RSI) portrays a slight positive slope within positive territory, indicating steady buying momentum. This, in combination with the green bars represented by the Moving Average Convergence Divergence (MACD), furthers bullish sentiment and suggests an underlying upward price trajectory.

Meanwhile, the placement of the index with respect to the Simple Moving Averages (SMAs) provides additional insights. Remaining above the 20-day SMA confirms a short-term bullish bias. The DXY’s position below the 100-day SMA could introduce occasional pullbacks, yet sustaining above the 200-day SMA demonstrates that the buying pressure overweighs the selling momentum on larger time frames.

Support Levels:  103.45 (200-day SMA),103.30, 103.00.
Resistance Levels: 103.90,104.00,104.20.