Dollar comes under pressure from hawkish ECB and expectations for softer rhetoric from Fed

The dollar index accelerated lower on Wednesday, extending weakness into second straight day, signaling that recent recovery is likely over as fresh weakness retraced over 61.8% of 105.15/107.88 corrective leg.

Hawkish comments from the ECB which signaled it will keep raising rates until inflation returns to 2% target weighs on dollar, as markets shows growing expectations that the Fed  may start slowing the pace of policy tightening after four jumbo hikes in a row, though will remain on track for further raising, but wants to assess the results of the recent action and remain cautious not to overshoot that would cause problems.

Significantly weaker picture on 4-hr chart and overall bearish daily techs, add to dollar’s negative near-term outlook.

Bears eye immediate target at 105.79 (Fibo 76.4% / 200DMA), ahead of key near-term support at 105.15 (Nov 15 low) loss of which would signal continuation of larger downtrend and expose key short-term support at 104.49 (Aug 10 low).

Fed minutes are due later today and expected to give more hints about dollar’s near-term direction.

Res: 108.30; 108.81; 109.05; 109.61
Sup: 105.70; 105.15; 104.95; 104.49