USD index outlook: The dollar benefits from fresh risk aversion

Slobodan Drvenica Windsor Brokers

US DOLLAR INDEX

Strong risk aversion hit markets on Thursday as fading prospects for economic recovery after European governments tightened restrictions to battle an accelerating second wave of coronavirus, prompted investors into safety.
The dollar was the top gainer of the European session, with dollar index being up nearly 0.4% for the session.
Fresh advance extends recovery from 92.99 (09 Oct low) into fourth straight day and cracks important barriers at 93.67/74 (Fibo 38.2% of 94.78/92.99/20DMA). Bulls look for clear break here that would generate fresh signal for recovery extension towards next pivots at 94.00/09 (round-figure/Fibo 61.8% of 94.78/92.99).
Fundamentals work in favor of greenback but technical studies lack clearer signal as RSI and Stochastic are heading north but momentum indicator remains in negative territory.
However, today's action is on track to form bullish engulfing pattern that would add to positive signals, with close above 92.70 required to confirm. Converged 10/30DMA's mark initial support at 93.54, guarding lower pivot at 93.28 (55DMA).

Res: 93.75; 93.95; 94.09; 94.35
Sup: 93.54; 93.41; 93.28; 93.10

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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