Does the dollar index have to go higher? - ForexLive

Dollar index rebounds

With US growth seemingly not abating, inflation still a concern, and the US dollar coming off a more than 50% correction adding to potential inflationary forces, does the US dollar have to continue the move back higher to get things back in balance?

It makes sense and indeed the dollar has been stepping higher.

Looking at the daily chart of the DXY (dollar index), it bottomed earlier this month (February 2) at 100.82. The DXY price traded for most of January, above and below the 50% midpoint of the move up from the January 2021 low at 101.994. Sellers had their shot below the 50% retracement but momentum could not be sustained. The price has been moving back higher since bottoming on February 2.

The fundamental catalyst for the move back higher?

The US jobs report which saw a gain of 517K jobs and the unemployment rate which fell to 3.4% - the lowest level since 1969. .

The move higher in the DXY was also helped by the move higher in rates. Looking at the 10 year yield chart below, it too bottomed on February 2nd. Technically, the low on that day dipped below the 200 day MA for the first time since December 2021, but could not gather downside momentum.

The US jobs report also helped to put the kibosh on that yield lower idea, and the 10 year yield has moved up some 62 basis points since that low.

So with yields and the dollar moving higher, what would hurt the DXY in the short term?

Looking at the hourly chart below, technically the 103.767 to 103.837 area has been home to recent lows (see red circles 8 - 11). The price also bottomed against that level in the early NY session. Going back farther, it was a swing defining area either as support or resistance.

That swing area between 103.768 and 103.837 is now close support going forward.

Stay above keeps the buyers in firm control. Move below it - followed closely by the rising 200 hour MA (green line) currently at 103.687 - would throw cold water on the bullish technical bias (at least in the short term).

Until then, however, the story for a higher dollar from a technical and fundamental perspective remains intact.

DXY on the hourly chart has support between 103.768 -103.878

Adblock test (Why?)

https://news.google.com/rss/articles/CBMiXmh0dHBzOi8vd3d3LmZvcmV4bGl2ZS5jb20vdGVjaG5pY2FsLWFuYWx5c2lzL2RvZXMtdGhlLWRvbGxhci1pbmRleC1oYXZlLXRvLWdvLWhpZ2hlci0yMDIzMDIyMS_SAWJodHRwczovL3d3dy5mb3JleGxpdmUuY29tL3RlY2huaWNhbC1hbmFseXNpcy9kb2VzLXRoZS1kb2xsYXItaW5kZXgtaGF2ZS10by1nby1oaWdoZXItMjAyMzAyMjEvYW1wLw?oc=5

2023-02-21 20:30:00Z
CBMiXmh0dHBzOi8vd3d3LmZvcmV4bGl2ZS5jb20vdGVjaG5pY2FsLWFuYWx5c2lzL2RvZXMtdGhlLWRvbGxhci1pbmRleC1oYXZlLXRvLWdvLWhpZ2hlci0yMDIzMDIyMS_SAWJodHRwczovL3d3dy5mb3JleGxpdmUuY29tL3RlY2huaWNhbC1hbmFseXNpcy9kb2VzLXRoZS1kb2xsYXItaW5kZXgtaGF2ZS10by1nby1oaWdoZXItMjAyMzAyMjEvYW1wLw

Bagikan Berita Ini