- On Wednesday evening, we saw the creation of a new low of the dollar index at the level of 100.92.
Graphical analysis of the dollar index
On Wednesday evening, we saw the creation of a new low of the dollar index at the level of 100.92. After eight months, the dollar fell back below the level of 101.00. This time we stabilized and saw the beginning of bullish consolidation yesterday. The index rose to 101.62 and broke above the EMA 50 moving average.
During the Asian session this morning, the dollar retreated again, this time to the level of 101.20, where it found new support and formed a higher low compared to the previous level. We are now at 101.42 and will try to find the support of the EMA 50 moving average again. This time, this would mean something more concrete and we could expect the start of a bullish consolidation and the recovery of the dollar index. Possible higher targets are the levels of 101.80 and 102.00.
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The index is positive for the second consecutive day and could continue its recovery next week.
For a bearish option, we need bearish consolidation moves and a drop below the level of 101.20. This will form a new daily low and confirm the increase in bearish momentum. After that, we need to watch the dollar retreat to lower levels. Possible lower targets are the levels of 101.00 and 100.80.
Among today's news, we highlight Japanese core inflation, which rose from 2.6% to 2.7%. There is no significant news in the EU session. Later in the US session, we will have the new home sales report and Federal Reserve Chairman Jerome Powell will speak. During his speech, we expect increased volatility in the dollar index. Powell will speak about the state of the US economy and future Fed interest rate moves.
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