US Dollar Index outlook: The Dollar index is standing at the back foot on Tuesday morning

Slobodan Drvenica Windsor Brokers

US Dollar Index

The dollar index is standing at the back foot on Tuesday morning, extending pullback from last week’s recovery high (150.87), with slower pace expected ahead of key release – US inflation report, due later today.

Daily studies weakened as the price eventually broke into rising and thick daily cloud and negative momentum is rising, marking a negative signal and keeping the downside vulnerable, while near-term action stays capped by daily cloud top (105.35) reinforced by daily Kijun-sen.

Initial support lays at 105.18 (Fibo 23.6% of 99.20/107.03 rally) guarding more significant Nov 6 low (104.66) violation of which would risk deeper pullback and expose key supports at 104.00 zone (Fibo 38.2% . 100DMA).

Larger picture, however, remains dollar favored as the greenback enjoys support from the US rates being higher than most of major central banks (except (BoE) and recent renewed hawkishness in Fed’s view of monetary policy, suggesting that the US central bank would keep high rates for some time.

US inflation report will be closely watched for fresh signals, with expectations that CPI will ease to 3.3% in Oct from 3.7% last month, but core CPI which excludes volatile food and energy components is expected to stay unchanged at 4.1% y/y, which could be seen as discouraging for those who expect rate cuts in the near future.

Res: 105.54; 105.81; 106.31; 106.67.
Sup: 105.32; 105.18; 104.66; 104.32.

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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