- The US Dollar Index has dropped to near day’s low around 104.90.
- Volatility in the US Dollar Index has contracted ahead of the US Inflation release.
- The 200-EMA at 105.20 is acting as a major barricade for the USD Index.
The US Dollar Index (DXY) is displaying wild moves as investors are dwindling ahead of the release of the United States Consumer Price Index (CPI) data. Anxiety ahead of the release of the US inflation is restricting investors from making decisive moves in the early European session. The USD Index has sensed selling pressure while attempting to cross the critical resistance of 105.10.
The asset has dropped to near day’s low below 105.00. Meanwhile, S&P500 futures have recovered after a marginal sell-off in the Tokyo session. It seems that the risk-appetite theme is regaining traction.
On an hourly scale, the USD Index is auctioning in a symmetrical triangle chart pattern that indicates volatility contraction. The upward-sloping trendline of the chart pattern is plotted from December 9 low at 104.48 while the downward-sloping trendline is placed from December 8 high at 105.43.
The 200-period Exponential Moving Average (EMA) at 105.20 is acting as a major barricade for the asset. Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which indicates a consolidation ahead.
Should the USD Index break below December 12 low at 104.66, bears will drag the asset toward December 5 low at 104.12, followed by June 16 low at 103.42.
Alternatively, a decisive move above December 12 high at 105.20 will result in a symmetrical triangle breakout, which will send the USD Index toward December 8 high at 105.43. A break above the latter will drive the asset toward December 7 high at 105.77.
US Dollar Index hourly chart
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