COMMENT-Perhaps the dollar has been set up to fall

The dollar has met an important correction target just before a vital interest rate decision that could pave the way for the resumption of a downtrend which has been the dominant influence on traders this year. The could mean the greenback has been set up to fall.

The dollar has made big gains ahead September's Federal Reserve policy meeting on the back of short covering which has resulted in traders owning no bets on it dropping at this vital time.

The rise of the dollar index in the past 8 weeks of roughly 6% from 99.55 to 105.43 that looks large, is actually a small move that has met the target for a minimum technical correction at 105.37 of the prior much larger slump from 2022's high at 114.78.

Ahead the event the index is lying below the daily Ichimoku cloud which is set to thicken and fall - potentially weighing on the greenback. The index is also close to the top of the 20-week Bollinger bands - the rise is stretched.

While there is clearly reason to eye a peak that could follow confirmation from the Fed that rates won't rise any further, a hawkish surprise could spark a further rise, between 2-4%. One way or the other it is wise to anticipate greater volatility after September's meeting.

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