FXstreet.com (Edinburgh) - The greenback is trading on the back foot on Tuesday, dragging the US Dollar index to the area of 81.15/20, retracing yesterday’s advance ahead of FOMC gathering.

DXY remains under pressure

Since the poor results from August’s Payrolls, the decline of the USD has intensified on relieving news from the Middle East and Larry Summers abandoning his race to succeed Chairman Bernanke. The index almost fully retraced the late August rally amidst a bearish scenario ahead of tomorrow’s FOMC meeting. “The USD has managed to recover some of the Summers-driven sell-off as investors prepare for the FOMC outcome and, with the markets still largely pricing in a dovish outcome for the meeting, the more significant risk that the meeting does not fully deliver on those market expectations”, commented analysts at TD Securities.

DXY levels to watch

At the moment the index is losing 0.17% at 81.14 and a break below 81.10 (low Aug.27) would expose 80.86 (low Aug.8) and finally 80.75 (low Aug.20). On the upside, the initial barrier aligns at 82.50 (high Aug.2) followed by 82.67 (high Sep.5) and then 83.02 (high Jul.18).