Dollar Index: Off two-week lows on hawkish Fed minutes

• Dollar picked up a bid on hawkish Fed minutes.
• The greenback could take a hit if Syrian tensions fade.

The dollar index (DXY), which tracks the value of the greenback against the major currencies, recovered from the two-week low of 89.35 after the Fed minutes showed the policy makers see higher inflation, growth and scope for faster rate hikes.

As of writing, the DXY is flatlined around 89.50, having suffered a four-day losing streak.

“All participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months,” the Fed minutes said. “In addition, all participants expected inflation on a 12-month basis to move up in coming months, the minutes revealed.

Despite the hawkish tone, the 10-year treasury yield barely moved and was last seen trading at 2.78 percent. The dull response indicates the markets are not buying the Fed's hawkish talk.

The greenback may benefit to some extent as the Syrian crisis will likely boost demand for the safe haven treasuries. However, the market may resume buying risk assets and selling the US dollars once the Syrian fears fade.

Further, the seasonality study shows April is a bad month for the greenback.

Dollar Index Technical Levels

A clear break above 89.82 (April 2 low) could yield a rally to resistance lined up at 90.45 (March 20 high) and 90.60 (April 5 high). On the downside, failure to defend 89.40 (March 7 low) would open up downside towards 89.00 (psychological support) and 88.94 (March 27 low).