Dollar Index eyes key support after Friday's bearish reversal
|- The dollar index holds support at 91.00 after Friday's rejection at 91.60.
- The greenback's corrective bounce looks to have ended, but losses could be limited.
The dollar index, which tracks the greenback's value against majors, is sidelined near 91.05 at press time.
The greenback's corrective bounce from the Jan. 6 low of 89.21 looks to have ended, Friday's bearish outside day candle indicates. The index fell by 0.5%, as the US Nonfarm Payrolls posted a partly gain of 49K jobs in January, pointing to a slower economic recovery.
"The disappointing US jobs data may mark the end of the first phase of the dollar's recovery. A bearish key reversal was posted when it reversed lower after making a new high (~91.60) for the move and closing below the previous session's low (~91.08)," Marc Chandler, chief market strategist at Bannockburn Global Forex and author of the book "Making Sense of the Dollar," noted in his blog.
The renewed risk-on action in the stock markets also favors downside in the anti-risk US dollar.
However, growth differential may limit the downside. While the US economic recovery looks to have slowed, the Eurozone economy is contracting due to coronavirus restrictions.
Technical levels
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