The dollar index ticked lower after downbeat US housing data (building permits unexpectedly dropped by 4.1% in July, undershooting the forecast for 2% fall and well below 9.2% increase in June, while Housing starts were down 4.8% in July against forecasted rise of 0.5% and increase of 7.4% in June). Weaker than expected data so far did not show stronger impact dollar’s bulls which were boosted by strong retail sales on Tuesday, however, the dollar continues to struggle at psychological 94.00 barrier (reinforced by falling daily Kijun-sen). Today’s repeated rejection at 94.00 and yesterday’s failure to close above 93.85 (Fibo 38.2% of 96.24/92.37) suggests that strong recovery rally from Monday might be running out of steam but also awaiting FOMC minutes, due later today, for further signals. Traders are expecting Fed to provide more guidance about next steps and timing on massive balance sheet reduction as well as firmer signals about possible rate hike towards the end of the year. More hawkish tone from minutes would further boost the greenback and index price would rise above 94.00 barrier towards Fibo barriers at 94.31 and 94.75, with psychological 95.00 resistance expected to come in focus. Softer tone from Fed, on the other side, would allow for deeper pullback and expose solid support at 93.30 (daily Tenkan-sen).
Res: 94.00; 94.31; 94.75; 95.00
Sup: 93.64; 93.30; 93.00; 92.82
