US Dollar Index outlook: US Dollar continues to ride on the wave of optimism about Fed rate hike

Slobodan Drvenica Windsor Brokers

US Dollar Index

The dollar continues to trend higher and hit highest levels in over one year on Wednesday, moving in a steep bull-leg that extends into sixth consecutive day.

Growing bets of Fed rate hike (currently at 72% for September rate hike vs 45% previous month), following recent hawkish remarks from US policymakers and economic data signaling that US economy remains strong, continue to underpin the dollar.

The price rises above psychological 100 level for the second straight week, with Tuesday’s break above 101 zone (Fibo 38.2% of 110.00/95.35 downtrend / round-figure), bringing in focus targets at 102.00 and 102.40/60 zone (bull-channel upper boundary / 50% retracement / 200WMA) and 102.91 (weekly cloud top).

Bulls continue to hold grip and so far do not react to overbought daily studies, though some corrective action should be anticipated in the near term.

Broken Fibo 38.2% (100.94) and former top (100.48) reverted to solid supports which should ideally contain potential dips.

Caution on extension below 100.00 pivot that would put bulls on hold and allow for deeper pullback.

Res: 101.80; 102.00; 102.40; 102.67.
Sup: 100.94; 100.48; 100.21; 100.00.

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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