The US dollar is heading towards 105.00

• The US Dollar is trading higher ahead of the release of Nvidia earnings and Fed Minutes.
• Volatility around the Dollar could pick up with the release of numerous economic data on Thursday.
• The US Dollar Index is trading in a tight range, starting to break above the important moving average.

The US Dollar (USD) begins to rally as markets await about 24 hours of volatility that will begin with the publication of the Federal Reserve (Fed) Minutes of the recent decision of the Federal Open Market Committee (FOMC) on why they held stable interest rates. While the report may be a market-moving event, not much is expected this time, as traders have heard numerous Fed speakers since Monday, all broadly advocating keeping interest rates at current levels with no rises anticipated. After that, the expected earnings from Nvidia (NVDA) could set the tone for risk appetite ahead of Thursday, when a lot of US data will be released.

As for economic data, Wednesday will be rather weak, with existing home sales the only important data to be released. More activity is expected on Thursday, when the usual jobless claims numbers are released.

Daily summary of market movements: Find an escape before new news breaks

• Markets were surprised by UK inflation data. Monthly headline inflation rose 0.3% from 0.6% previously, above the 0.1% forecast. Markets thus revalued most major currencies somewhat amid initial expectations of rate cuts by central banks.
• Wednesday's US agenda kicked off with the Mortgage Bankers Association's survey of this week's mortgage applications. Last week there was a constant increase of 0.5%, and this week the result was 1.9%.
• Existing home sales figures for the month of April will be published at 14:00 GMT. In March, home sales fell 4.3%.
• Nvidia's earnings will be published around 16:00 GMT, which could set the risk tone for the rest of the day.
• Around 17:00 GMT, the US Treasury will auction 20-year bonds on the market.
• At 18:00 GMT the Fed Minutes will be published.
• Stocks are falling again despite US indices posting gains on Tuesday.
• CME's Fedwatch tool is seeing a shift in prices, with June projections near 98.4% for no change in the official interest rate versus a 1.6% chance of an increase. In September futures, the probability of a 25 basis point cut is 50.6%.
• The 10-year US Treasury yield is trading around 4.44%, near the week's high.

US Dollar Index Technical Analysis: Sell the Rumor?

The US Dollar Index (DXY) is starting to break out of its tight range ahead of some market moves that are difficult to prepare for in advance. Nvidia earnings could be the main event even for this Wednesday as they have the ability to decide the overall market mood. The fact that single stock gains could set the risk tone for the rest of the US trading session could see traders chasing the trade and moving the US Dollar Index in an unusual direction.

To the upside, the DXY index is already close to a strong resistance level. The first level to recover is the 55-day SMA at 104.74. Further up, the next levels to consider are 105.12 and 105.52.

On the downside, the 100-day SMA around 104.22 is the last man supporting the decline. Once that level is broken, an air pocket will form between 104.11 and 103.00. If the US Dollar's decline persists, the March low at 102.35 and the December low at 100.62 are levels to watch.