Technical Bias: Bullish
Key Takeaways
US dollar likely to continue trading higher as bulls remain in control.
US Producer Price Index (PPI) might act as a catalyst for the US dollar later today.
US dollar index support seen at 83.70 and resistance ahead at 84.50.
The US dollar bulls might not give up so easily, as the US dollar index continues to gain traction in the near term.
Technical Analysis
There is a bullish trend line on the 4 hour chart of the US dollar index, which is one of the most important reasons why the US dollar might continue to gain bids. Furthermore, the 23.6% Fibonacci retracement level of the last leg from the 81.34 low to 84.51 high is also sitting around the mentioned trend line. So, there is a lot of support around the 83.70-60 levels. A break and close below the stated support area might call for more losses towards the 38.2% fib retracement level, which also coincides with the 100 simple moving average (SMA) – 4H. On the downside, initial support is around the 50 SMA (4H), followed by the highlighted trend line. There is a minor divergence forming on the 4H RSI, which might result in a short-term pullback moving head.
If the US dollar index bounces from the current or lower levels, then the previous high of 84.51 remains a hurdle. If it is broken, then a move towards the 85.00 resistance area is possible in the near term.
US Producer Price Index
Later during the New York session, the US Producer Price Index (PPI) data will be published by the Bureau of Labor statistics, Department of labor. The forecast is of no change in the prices in August compared to the last month. So, if the end result is on the positive side, then the US dollar might trade higher in the short term.
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