The dollar slowly perks up ahead of US CPI and FOMC meeting

The US dollar is trying to form a base following its false break of the August low. Whilst it saw a daily close beneath the key level on Friday 2nd December, a bullish engulfing candle formed the following day. Furthermore, a higher low formed on Friday with a Spinning top Doji and held above the August low, and momentum is pointing higher today. So if this week’s FOMC meeting is more hawkish than currently expected, these levels likely look appealing for bulls after its near-10% retracement. With that said, I suspect volatility will be lower ahead of this week’s US CPI report and FOMC meeting as traders may be wary to front-run these key events.

- The bias is bullish above last week's low (although a more aggressive stop could be used beneath Friday's low)
- Open upside target, given the market has retraced nearly 10% from its highs and the Fed have the potential to deliver a hawkish hike this week