- DXY pushed higher by technical factors.
- Risk of short-term bullish reversal.
The greenback is showing signs of life in early Europe.
Having hit a fresh three-year low of 90.21 in Asia, the dollar index (DXY) now trades 0.20% higher on the day at 90.62.
The oversold conditions as shown by the RSI on the daily and the bullish price-RSI divergence on the 4-hour chart seems to have played a role in pushing the dollar index higher. The recovery adds credence to the bearish exhaustion indicated by yesterday's doji candle.
However, a short-term bearish to bullish trend change (bullish doji reversal) would be confirmed only if the dollar index closes today above the previous day's (doji candle) high of 90.82.
A better-than-expected US industrial production data (due at 14:15 GMT) could help DXY close above 90.82. Also, the realization is seeping into the markets that the ECB, BOJ and other major central banks could be a lot slower in tightening screw than previous thought. So, the greenback may once again start rising in response to favorable rate/yield differential.
Dollar Index Technical Levels
A close above 90.82 would open doors for a sustained move higher to 91.46 (Sep. 20 low). A violation there would expose 92.00 (psychological level). On the downside, breach of support at 90.21 could yield a test of major psychological support of 90.00. A close below the same could yield 89.17 (March 2009 high).
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