The US dollar surged against its major counterparts after the US Federal Reserve brought forward its projections for the first post-pandemic crisis interest rate hike in 2023.
Hawkish shift towards earlier than expected start of policy changes was supported by swift economic recovery, strong rise in inflation and significantly improved health situation in the United States.
The dollar index which tracks the performance of the US dollar against the basket of six major currencies rose nearly 1% after Fed’s announcement on Wednesday, registering the biggest one-day advance since March 2020.
Technical studies look increasingly bullish on daily chart as the rally broke above pivotal barriers at 91.00 zone (Fibo 38.2% of 93.45/89.50 fall / 100DMA) getting initial signal of reversal of the downtrend from March 31 high at 93.45.
Bulls generated further positive signal on extension above 200DMA (91.52) and about to emerge from thick daily Ichimoku cloud (cloud top lays at 91.69) for attack at next key Fibo resistance at 91.94 (61.8% of 93.45/89.50)’ break of which would confirm reversal and further squeeze larger shorts.
The index is on track for the biggest weekly rally since the third week of September 2020 that adds to positive signals, with dip-buying seen as preferred strategy for now.
Res: 91.94, 92.34, 92.52, 92.83.
Sup: 91.45, 91.00, 90.78, 90.60.
