Dollar comes under increased pressure after dovish Fed minutes

Slobodan Drvenica Windsor Brokers

The dollar index came under increased pressure on Thursday after overall soft US data and dovish Fed minutes further soured the sentiment that resulted in gap-lower opening and fresh extension to seven-day low.

The dollar remains firmly in red against the basket of major currencies and eyeing key near-term supports at 105.15 (Nov 15 spike low, reinforced by 200DMA) and 104.95 (Fibo 38.2% of 89.15/114.72 ascend), loss of which would signal further significant drop.

The US central bank softened its stance after aggressive period of policy tightening, signaling a 0.5% hike in December (following for consecutive 75 basis points hikes) and possible 0.25% raise in the first meeting next year.

The policymakers are satisfied with results from the tightening phase as inflation generated initial signal of peaking and started to ease, but also with strong labor market that ease concerns about the pace of tightening and allows policymakers to take a breather after the recent wave of a massive hikes.

Technical studies are bearish on daily chart, with additional negative signal seen from formation of reversal pattern on monthly chart (the index was down over 5% this month).

Res: 107.41; 107.88; 108.81; 109.48
Sup: 105.15; 104.95; 104.49; 103.85

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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