The dollar index edged lower on Tuesday, following a multiple failure to sustain probes above psychological 100 barrier.
Traders sold dollar after US inflation rose further in March and made a biggest multi-year rise, but some signs add to expectations that inflation may have peaked and may start to ease that would reduce needs of the US Federal Reserve to be aggressive in tightening monetary policy in the second half of the year.
Daily studies show fading bullish momentum and stochastic emerging from overbought territory, opening way for correction, as bulls faced headwinds from psychological 100 level Fibo barrier at 100.34 (76.4% of 103.80/89.15 downtrend).
More evidence of pullback is still needed, with today’s close in red seen as initial signal, which would look for confirmation on close below pivots at 99.59/41 (Monday’s low / former top of Mar 7).
Rising 10DMA (99.22) marks next support, followed by converging 20/30DMA’s at 98.87/77, broken Fibo 61.8% at 98.20 and key support at 97.72 (Mar 30 trough).
Cracked 100 level marks initial resistance, followed by 100.34 Fibo level, violation of which would signal bullish continuation.
Res: 100.00; 100.20; 100.34; 101.01
Sup: 99.59; 99.41; 99.22; 98.87
