The dollar holds within extended congestion above new three-month low at 89.61, posted on Friday.
Traders were disappointed by dovish stance from Fed as minutes from central bank’s April policy meeting showed that those policymakers who favor earlier start of reducing bond purchases are in minority.
Signals that any change in the policy is currently not in the pipeline, suggest that the outlook remains negative and the dollar is on track to resume its larger downtrend after consolidation.
Uncertain fiscal policy and expectations that US retail sales may start to slow down, offset positive signals from strong inflation figures, adding to dollar’s negative tone.
Bearish daily technical studies and weekly close below important Fibo support at 90.16 (76.4% of 89.15/93.45) support the notion, though bears still face headwinds from psychological 90 support, failing to register a close below here for the second consecutive week.
Near-term bears are expected to remain intact while current consolidation stays below daily Tenkan-sen (90.25) and keep in focus 2021 low at 89.15 (Jan 6), violation of which would risk test of next key levels at 88.24/14 (50% of 2011/2020 72.69/103.80 rally / 2018 low).
Falling and thickening weekly cloud maintains pressure, with the dollar index being on track for the second consecutive strong monthly loss that adds to bearish signals.
Res: 90.03, 90.25, 90.37, 90.48.
Sup: 89.61, 89.15, 88.93, 88.24.
