- On Tuesday, the dollar index managed to rise to the level of 104.80.
Dollar Chart Analysis
On Tuesday, the dollar index managed to rise to the level of 104.80. After the formation of the weekly high, the index started to lose volume and turn to the bearish side. We saw an attempt to stay above the level of 104.50, but it all ended in failure for the dollar. The fall did not stop there, but we saw a continuation today. During the Asian trading session this morning, the dollar index started a strong bearish consolidation, falling below the EMA 200 and the weekly opening price.
That move only strengthened the bearish momentum, which continued to push us down to a fresh weekly low at 103.93. Even the potential support at the 104.00 level did not last, but we did see a break below it. Based on the current picture, we can expect a further pullback and the formation of a fresh lower low. Possible lower targets are the 103.90 and 103.80 levels.
The Federal Reserve will decide the fate of the dollar tonight: will it save it from further decline?
For the dollar price to turn bullish, the dollar index needs to stabilize above the 104.00 level to start with. If the index succeeds in doing so, you can expect a recovery and a move to the bullish side. After that, it should start a bullish consolidation and move towards higher levels. Possible higher targets are the levels of 104.10 and 104.20.
Tonight we expect very important news from the US market: the Fed will announce the future interest rate. This is a crucial event that could significantly influence the market. Economists expect that the interest rate could remain at 5.50%. Half an hour later we will have a press conference that could indicate the future monetary policy of the Fed.
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