From the Jan 07 high the dollar futures are in an extended wave five free fall with 73 the next support. From 73 a bounce to 76/78 would be expected.
Best,
Larry
Keeping in mind the bigger picture for the dollar's pattern, this weekly chart shows the last four years:
U.S. Dollar chart, Weekly, 2004-present
The move down from 2005 is one big A-B-C pullback for bold wave-( on the chart. That wave count calls for a very large rally in bold wave-© that takes us well into next year. But it needs to start rallying now as it's just about reached its limit for how far it can drop without turning the wave pattern very bearish. It could get a quick spike down post-FOMC but considering the multiple bullish divergences on every time frame now, from 5-min to monthly, I just don't see much more, if any, downside left to this.
I'd even go so far as to say if the dollar doesn't rally from here then it's in real trouble. In that case it could be a long way from a bottom and that would suggest we've got a bigger rally ahead of us in gold, oil and the other commodities and that we've got some serious inflation headed our way. It might be good for another stock market rally leg into year-end (if that long) but very likely bonds would sell off (perhaps providing some money for stock purchases) driving yields higher (stopping the Fed in their tracks and forcing them back into a rate Increase mode) and eventually killing any stock market rally due to fears of excessive inflation. Bad, bad, bad.
I see nothing good coming out of that scenario. So the Fed's in a corner here (the one I've been saying for a long time that they've painted themselves into). They can cut rates excessively now and kill the dollar (and cause all the problems I just said) or they can cut a little and cross their fingers that the dollar doesn't take a hit or they can sit tight in support of the dollar and keep the foreigners buying our debt. As I said, if forced to make a guess as to what the Fed will do based on one chart--they'll sit tight and the dollar will rally. With that forecast and a dollar you can buy yourself a cheap (very cheap) cup of coffee.
Regards,