The dollar index is under strong bearish pressure this week
On Tuesday, the dollar index initiated a deep pullback to a new low
Dollar index chart analysis
On Tuesday, the dollar index initiated a deep pullback to a new low. At the 103.20 level, the index encountered resistance and began a retreat that lasted until last night to the 102.55 support level. This was followed by consolidation during this morning’s Asian session around 102.60. In the EU session, we got new bearish signs, and the dollar index started a new retreat.
The release of American inflation data at the start of today’s US session was a pivotal moment. With annual inflation dropping from 3.0% to 2.9%, the dollar felt the blow, as reflected on the chart. The index plummeted to a new low of 102.36, with potential lower targets at 102.20 and 102.00 levels.
Does the dollar have the strength to stop this pullback, or are we headed for a new low?
For a bullish option to materialize, the dollar index must first stabilize above the 102.60 level. If this occurs, we could anticipate the start of bullish consolidation. A move above 102.70 would provide the index with the momentum to reach 102.80. At this level, index will strive to gain support from the EMA 50 moving average. With this support, the likelihood of a more sustained recovery and a visit to higher levels increases. Potential higher targets are 102.90 and 103.00 levels.
Today’s news in the US session shook the dollar index chart. Data on monthly inflation are in line with forecasts, and core CPi data is also the same as forecast. This was interpreted as a sign that the Fed could loosen its monetary policy and lower the interest rate at the next meeting. Data on Crude Oil Inventories will be released later in the session.
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