Dollar Index outlook: Consolidation to likely precede fresh weakness
|Dollar Index
The dollar index is holding in prolonged sideways mode and ranging between 200DMA (103.39) and 100DMA (104.02) in a holiday-thinned markets.
The bear-leg from a double top at 106.98/107.03) is taking a breather after 1.9% drop previous week, but bears hold grip and warn of fresh weakness after consolidation.
Strong negative momentum and multiple MA bear-crosses on daily chart weigh on near-term action, with additional pressure on dollar expected from shift in Fed’s view on interest rates, as narrative changed from signals for further tightening to rate cuts in just a couple of weeks.
Also, the greenback is likely to be sold more towards the end of the year, as investors may further clear larger longs from the second half of 2023.
Break of 200DMA to generate initial bearish signal, which will look for verification on clear break of 103.11 pivot (50% retracement of 99.20/107.03 uptrend) and signal bearish continuation.
Caution on bounce above 100DMA (104.02) which would sideline immediate downside risk and challenge upper pivot at 104.33 (base of thick daily cloud, reinforced by daily Tenkan-sen).
Res: 104.02; 104.45; 104.66; 105.18.
Sup: 103.39; 103.11; 102.84; 102.19.
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