The dollar extends weakness in early Thursday’s trading, following a posted’s drop in a typical ‘buy the rumor, sell the fact’ action.
The US central bank was more hawkish than expected with decision to accelerate tapering its bond purchases and end the program by March 2022 being, but surprised by indicating three 25 basis-point rate hikes next year, compared to widely expected two increases.
The Fed’s Chair Powell was upbeat on economic activity and recovery in the labor sector, supporting the FOMC decision, although many analysts see the Fed’s decision as a panic action in attempt to chase surging inflation.
Daily chart shows a negative signal from Thursday’s bearish candle with long upper shadow, formed after bulls stalled on approach to 2021 high at 96.92, posted on Nov 24.
This mainly reflects on hourly and 4-hr charts, where technical studies weakened significantly, keeping near-term focus shifted to the downside.
But daily techs remain in bullish setup, as rising momentum is about to break into positive territory and the action underpinned by 10/200WMA golden-cross, seeing current easing as extended consolidation of a larger uptrend.
Bulls may have another chance to accelerate after the ECB policy meeting, due later today, as market has been pricing in a divergence between the Fed and the European central bank.
Today’s close below converged 10/20DMA’s (96.24) would signal near-term top and keep the downside vulnerable, but dips towards 95.50 support (consolidation range floor / Fibo 38.2% of 93.24/96.92 upleg) would offer better buying opportunities as overall picture is bullish.
Res: 96.24, 96.57, 96.92, 97.78.
Sup: 96.05, 95.82, 95.52, 95.08.
