Technical Bias: Short-term Bearish
Key Takeaways
US dollar was seen trading lower against a basket of currencies including the Euro, British pound and the Japanese yen.
US dollar index traded below an important support area.
US consumer price index might act as a catalyst for more downside in the near term.
The US dollar index pierced a critical level and opened the doors for downside acceleration. Moving ahead, more losses are possible if sellers remain in control.
Technical Analysis
There was a monster bullish trend line formed on the 4 hour chart of the US dollar index, which was broken recently. The US dollar index also closed below the 100 and 50 simple moving average (SMA) – 4H, which is a strong bearish sign. There is a chance that the dollar index might move higher from the current levels to retest the broken trend line, which is now coinciding the 38.2% Fibonacci retracement level of the last leg from the 89.55 high to 87.61 low. The 100 SMA – 4H is also sitting around the highlighted resistance area. So, there is a major hurdle around the 88.30-40 level. If the dollar index climbs from the current or a bit lower levels, then it might find it difficult to break the stated area. The 4H RSI is well below the 50 level, which adds to the view that more downsides are likely moving ahead.
On the downside, the last swing low of 87.61 might act as a support in the short term. A break below the same could take the dollar index towards the 87.20 level.
US Consumer Price Index
Later during the NY session, the US Consumer Price Index will be released by the US Bureau of Labor Statistics. The forecast is slated of a minor decline of 0.1% in November 2014, compared with the preceding month. If the outcome misses the forecast, then the US dollar might come under pressure.
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