• US Dollar strength is being faded in the wake of the latest FOMC minutes release
• DXY Index is slipping from its April high as resistance holds firm
• Fed officials believe that this year's tapering of asset purchases could be appropriate

As EUR/USD rallies and USD/JPY pivots lower, the US Dollar is gaining back ground during Wednesday afternoon trading. This is following the FOMC minutes being released just now. Fed hawks seem to be disappointed. Although the FOMC minutes noted that certain conditions could warrant a decrease in asset purchases over the next few months, cautious language was retained.

According to Federal Reserve officials, "several", tapering will be done early next year because the labor market isn't close to meeting their'substantial further progression' goal, there is lingering uncertainty about inflation and other risks to the economic outlook.

DXY INDEX- US DOLLARPRICE CHART: DAILY TIMES FRAME (16 MARCH to 18 AUGUST 2021).

Officials at the FOMC consider inflation to be temporary, but supply chain disruptions or increases in input costs could continue to push prices up into 2022. In the FOMC minutes, it was also noted that taper discussions should include the possibility of price reductions not occurring for some time. It also highlighted the risk of rising COVID-19 rates associated with the delta variant. This is especially important considering how it might delay returning to work or school and slow down the economic recovery.

This tone was arguably patiently accommodating and probably explains the recent influx in US Dollar weakness. In the absence of a bullish catalyst, such as a potential Fed tapering at year-end, the US Dollar may struggle to maintain its altitude at these levels. This could put technical support at the 91.85 price level on the DXY Index in focus for US Dollar bears. The annual Jackson Hole Symposium, which could be used to discuss the timing and scope Fed tapering, is a significant event risk.