The dollar stands tall in early Thursday’s trading after being lifted by a surprisingly strong rise in US consumer prices.
The index is consolidating under a new one-week high, following 0.65% advance on Wednesday that generated an initial reversal signal on the formation of bear-trap under 90.16 Fibo support (76.4% of 89.15/93.45 rally).
Better than expected inflation data may prompt traders to start gradually exiting dollar shorts on hopes that fresh upward pressure on prices will persist that would improve the greenback’s near-term outlook.
Today’s release of US weekly jobless claims and US retail sales data, due on Friday, is expected to provide more evidence.
Fresh recovery was so far capped by 10DMA / Fibo 23.6% of 93.45/89.93 fall (90.76) with close above here to signal that bulls are gaining traction, however, the downside is expected to remain at risk as long as the price holds below key barriers at 91.27/41 (Fibo 38.2% / May 5 lower top).
Supports at 90.40/37 (5DMA / former low of Apr 29) need to hold dips and keep bulls in play.
Improving daily studies (rising 14-d momentum is approaching the centreline and about to break into positive territory and stochastic is heading north after reversal from the oversold zone) support the action, which is still fragile.
Res: 90.76, 90.85, 91.04, 91.27.
Sup: 90.40, 90.11, 89.93, 89.66.
