Dollar Index outlook: Growing concerns about US economic recovery continue to boost dollar's safe-haven appeal

Slobodan Drvenica Windsor Brokers

The dollar extends rally into fifth straight day and hits new two-month high on Thursday. Higher than expected US jobless claims added to concerns about the economic recovery already dented by stalled talks about the new package of fiscal support and rising number of coronavirus infections.

Bulls cracked double-Fibo resistance at 94.57 (Fibo 23.6% retracement of 103.80/91.71 fall / FE 100% of third wave of five-wave sequence from 91.71, 01 Sep low), with firm break here to expose strong barrier at 94.93 (daily cloud top) and unmask next targets at 95.30/57 (FE 138.2% / falling 100DMA).

The dollar index is on track for strong weekly gains that would add to positive signals as reversal pattern is forming on weekly chart.

Rising bullish momentum on daily chart underpins the action, but strongly overbought stochastic and RSI stalling on overbought zone border warn that bulls may face headwinds and take a breather in coming sessions.

Res: 94.93; 95.30; 95.57; 95.76
Sup: 94.28; 93.95; 93.65; 93.49

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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