Dollar Index forms doji at 2-month low, focus on US tax plan
- Dollar Index (DXY) forms doji, indicates bearish exhaustion.
- Focus on US tax reform developments.
The DXY fell to a two-month low of 92.50 yesterday before recovering sharply to end the day on a flat note at 92.90. The price action left a doji candle on the daily chart, which indicates bearish exhaustion.
However, the follow-through to doji is anything but encouraging. As of writing, the index is struggling to capitalize on the bearish exhaustion and is trading in the sideways manner below 93.00 levels.
Focus on US tax plan
The uncertainty over the prospects for US tax reforms, including tax cuts continues to weigh on the greenback. As per Reuters report, Republicans are hurrying to bring the US Senate version of their tax bill to a Senate vote, possibly as soon as Thursday. But it appeared they did not have enough vote yesterday with about a half-dozen Republicans seen as potential "no" votes.
Powell confirmation eyed
Markets are also keeping an eye on the upcoming change of guard at the Fed. Jerome Powell, in a statement to the Senate Banking Committee ahead of his confirmation hearing today, signaled that he does not intend to shake up things at the Fed. His hearing today could offer more insight into how he intends to run the central bank.
Dollar Index Technicals
An end of the day close above 93.00 today would confirm the bullish doji reversal and shall open up upside towards 93.45 (100-day MA) and 93.70 (50-day MA). On the downside, breach of support at 92.85 (session low) would expose 92.67 (Friday's low) and 92.50 (previous day's low).
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
