US Dollar Index outlook: Extended pullback from one-year high warns of deeper correction

Slobodan Drvenica Windsor Brokers

US Dollar Index

The dollar extends lower on Thursday, following Wednesday’s 0.52% drop, with Wednesday’s close below 10DMA (94.14) and today’s drop through Fibo 23.6% of 91.92/94.55 upleg, generating initial reversal signal.

After minor negative impact from downbeat US jobs data, which were seen as temporary, investors got disappointed after the minutes of FOMC’s September meeting showed that the Fed is all but certain about start tapering of stimulus this year and increased concerns that high inflation could persist.

Larger bulls stalled on approach to 200WMA (94.63) and the price slipped from one-year high (94.55), leaving a double-top on daily chart.

Thursday’s action broke below rising 20DMA (93.80) and eye pivotal Fibo support at 93.54 (38.2% of 91.92/94.55), violation of which would confirm reversal and risk drop towards 93.23 (50% retracement) and 93.08 (55DMA).

Broken 5/10DMA’s turned south and converging, in attempt to form bear-cross and add to negative signals.

Sharp loss of bearish momentum on daily chart and south-heading indicators contribute to negative near-term outlook.

Res: 93.93; 94.09; 94.43; 94.55.
Sup: 93.66; 93.54; 93.37; 93.23.

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.

EUR/USD weakens to near 1.1900 as traders eye US data

The EUR/USD pair loses ground to around 1.1905, snapping the two-day winning streak during the early European trading hours on Tuesday. Markets might turn cautious ahead of the release of key US economic data, including US employment and inflation reports that were pushed back slightly due to the recently ended four-day government shutdown.

GBP/USD edges lower below 1.3700 on UK political risks, BoE rate cut bets

The GBP/USD pair trades on a weaker note around 1.3685 during the European session on Tuesday. The Pound Sterling edges lower against the US Dollar amid political risk in the United Kingdom and rising expectations of near-term Bank of England rate cuts.

Gold drifts lower as positive risk tone tempers safe-haven demand; downside seems limited

Gold drifts lower during the Asian session on Tuesday and snaps a two-day winning streak, though it lacks strong follow-through selling and shows some resilience below the $5,000 psychological mark amid mixed cues. The outcome of Japan's snap election on Sunday removes political uncertainty, which, along with signs of easing tensions in the Middle East, remains supportive of the upbeat market mood.

Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals

Bitcoin Cash trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.

Follow the money, what USD/JPY in Tokyo is really telling you

Over the past two Tokyo sessions, this has not been a rate story. Not even close. Interest rate differentials have been spectators, not drivers. What has moved USD/JPY in local hours has been flow and flow alone.

Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals

Bitcoin Cash (BCH) trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.