US Dollar Index outlook: Dollar Index in defensive after a double upside rejection

Slobodan Drvenica Windsor Brokers

US Dollar Index

The dollar dipped further on Tuesday morning, extending pullback into second consecutive day after bulls repeatedly failed to break through pivotal Fibo support at 102.52 (38.2% of 105.85/100.45 downleg).

Upside rejection formed a double-top and signals a bull-trap, which adds to the downside pressure.

Conflicting signals on daily chart (strong bullish momentum, overbought stochastic and MA’s in mixed setup) require caution as last week’s strong recovery stalled at a breakpoint zone, also weighed by the nearby base of falling and thickening daily Ichimoku cloud (102.68).

The action failed to violate these barriers and generate fresh bullish signals for further gains, as subsequent pullback shifts near-term risk to the downside, although hopes that bulls may regain ground would be still alive if dips stay above 101.70 (broken Fibo 23.6% / daily Tenkan-sen).

Near-term action remains weighed by uncertainty over debt ceiling crisis, as President Biden was optimistic, while Republicans say that two sides are still far from reaching a deal, ahead of the expected meeting later today.

Res: 102.52; 102.68; 103.15; 103.26.
Sup: 101.91; 101.70; 101.52; 101.09.

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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