- Yesterday's US inflation data sent the dollar index down to 104.00.
Graphical analysis of the dollar index
The US inflation data released yesterday caused the dollar index to fall to 104.00. The data showed a decline in inflation, which had a negative impact on the dollar. After the formation of the July low, the index began to recover to 104.54. During the Asian session this morning, we did not have enough strength to break above 104.00, so a new daily high was formed.
The dollar index started a fresh pullback from that zone and is now at 104.35. There is pressure on the support zone and a push below and a test of yesterday's low could easily occur. Possible lower targets are the levels of 104.20 and 104.00. The dollar index, which hit the June low, was at the level of 103.99.
The dollar continues to fight against downward pressure and remains above 104.00
We need positive consolidation and a return above the 104.50 level for a bullish option. Then, it is necessary to stabilize there for some time to form the bottom from which to start conquering higher levels. Potential higher targets are the 104.60 and 104.70 levels. If the index moves above the 104.70 level, it could find additional support at the EMA 50 moving average.
Today's economic news highlights include French CPI and the report on new Chinese loans. Eurogroup meetings are also taking place today, which could affect the movement of the euro. In the US session, we highlight the report on the producer price index, followed by the Canadian building permits report and the Baker Hughes Total Rig Count in the US. Next week we will have new speeches from Jerome Powell, the chairman of the Fed, which will affect the movement of the dollar index.
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