Dollar Index outlook: Bulls pause for consolidation, expected to remain intact while above 107.00 support

Slobodan Drvenica Windsor Brokers

US Dollar Index

Near term action holds in extended consolidation under new multi-month high (108.28), as bulls took a breather in a quieted holiday trading.

Overall picture remains firmly bullish, with Dollar index being on track for the third consecutive monthly gain (over 7% advance in past three months).

The dollar index is also on track to register monthly close above the top of larger range (99.20/107.03) where the price was entrenched since December 2022.

The range top also marks 50% retracement of 114.72/99.20 correction (Sep 2022 / July 2023) and holding above this level will keep medium-term structure in firm bullish mode.

On the other hand, south turning daily indicators warn of possible correction or extended sideways trading, with solid supports at 107.47 (rising 10DMA) and 107.00 zone (former range tops) expected to hold dips and provide better levels to re-enter bullish market.

The dollar remains well supported by hawkish shift in Fed’s monetary policy outlook on still elevated inflation and expectations for more aggressive support to the economy from coming Trump’s administration, keeping in play prospects for stronger gains in coming months.

Next significant barriers lay at 108.80 (Fibo 61.8%) and 110.00 (psychological) violation of which to open way for full retracement of 114.72/99.20 corrective phase.

Res: 108.28; 108.80; 109.35; 110.00.
Sup: 107.47; 107.00; 106.73; 106.17.

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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