Dollar Index outlook: Limited upticks to precede fresh push lower

US Dollar Index

The dollar edges higher on Monday as larger bears show signs of fatigue following last week’s massive losses.

Weekly close below psychological 100 support (also near Fibo 61.8% of 89.15114.72 uptrend) and probe below the floor of larger range (99.20) has generated fresh bearish signal, which requires sustained break below these levels to be confirmed, however, bears may take a breather before fresh push lower.

Long tails daily candles of past two days signal fresh bids, but bounce is unlikely to be strong, as overall sentiment remains weak and daily technical picture firmly bearish.

Solid barriers at 100 and 100.30 (psychological / broken lower boundary of larger bear channel) followed by 100.90 zone (Fibo 38.2% of 104.29/98.77 bear-leg / Apr 3 spike low) are expected to provide stronger headwinds and to ideally cap recovery upticks.

The dollar, as a safe haven asset, reacted exactly opposite to what markets expected and what was supposed to be a textbook reaction in situation of growing tensions and high uncertainty,.

Instead, the greenback lost its safe haven appeal, with Swiss franc, Japanese yen and the Euro (which took dollar’s duties and accommodated many who migrated into safety).

Following this logic, the dollar should remain under increased pressure as trade tension between the USA and China, two largest world economies) mainly offset positive signals on President Trump’s latest decision to put all remaining tariffs on hold for 90 days.

Weakening fundamentals on growing signals that the US economy is in downward trajectory with strong warnings of recession and more dovish signals on US monetary policy (markets increased bets for 3 or 4 rate cuts this year) should also contribute to dollar’s weakness.

Res: 100.00; 100.30; 100.90; 101.23.
Sup: 98.90; 98.68; 98.14; 97.81.