USD index outlook: Dollar index falls to new two-year low after brief consolidation; fed in focus today

Slobodan Drvenica Windsor Brokers

US DOLLAR INDEX

The dollar index fell to new two-year low (93.32) on Wednesday, signaling that brief consolidation is over and bears re-take full control.
Dollar's steep fall broke below major Fibo support at 94.12 (61.8% of 88.14/103.80) this week and also penetrated the top of thick monthly cloud (93.78) that adds to negative signals.
July's action marks the third month in red and the biggest monthly fall in nearly a decade.
Technical studies remain firmly bearish on all larger timeframes, with oversold conditions so far making no impact to bears.
Fed's two-day policy meeting ends today, with expectations of central bank's dovish stance in reaction to rising virus cases that require fresh restrictive measures and fading expectations for quick economic recovery, seen as negative for the greenback. A note from Goldman Sachs on Tuesday, in which concerns about the durability of the dollar as main reserve currency are expressed and revised 12-month forecast for gold price to $2300, could heavily weigh on greenback.

Res: 93.78; 94.12; 94.77; 95.00
Sup: 93.32; 92.79; 92.29; 91.83

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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