Dollar index close to testing September low

• At the opening of the market this morning, the dollar index made a bearish gap from 101.10 to 101.00.

Graphical analysis of the dollar index

At the opening of the market this morning, the dollar index gapped lower from 101.10 to 101.00. During the Asian session, the index continued to retreat, falling below Friday's low of 100.90. In the European session, the trend continued to the new low of 100.66. The downward trend looks very strong and all indications are that we will see a further pullback and the formation of a new weekly low.

The next low that the dollar index could look out for is 100.58 on September 6, while the yearly low is one step lower at 100.51. For a bullish option, we need to see a retracement stop and the formation of a bottom. If we succeed in this, the chances of starting a bullish consolidation increase. The return of the dollar index to the level of 101.00 would be a good start to continue on the bullish side. We expect to see the gap close with the opening of the market this morning.

The index is on track to return to a new September low if the current trend continues.

With that move, we have broken above the 101.10 level and will get support from the EMA 50 moving average to continue on the bullish side. The higher potential targets are the 101.20 and 101.30 levels. We could find additional resistance at the EMA 200 moving average in the 101.30 area.

There is no major economic news today. On Tuesday we will have core retail sales for August in the US and retail sales. On Wednesday we will have a lot of important news: the British CPI and the Eurozone CPI in the European session. In the afternoon, during the American session, the Fed will announce the future interest rate. The forecast is that the interest rate could fall from 5.50% to 5.25%. The interest rate cut should have a negative effect on the dollar by weakening it. Half an hour after this announcement, we will have a press conference of representatives of the FOMC.