The dollar rallied across the board in immediate reaction to hotter than expected US inflation in August, which signal that price pressures are not easing at expected pace, implying that the US central bank will remain on aggressive hiking path in the policy meeting next week.
The data made the dollar attractive again after larger bulls took a breather, as expectations of another 75 basis points hike in Fed’s September meeting, were revived.
The dollar index surged around 1.6% in minutes after the release of rather disappointing data, so far retracing nearly 61.8% of the pullback from new 20-year high (110.77) to 107.65 and generating an initial signal that corrective phase might be over.
Four-day correction was contained by daily Kijun-sen and 50% of 104.49/110.77 upleg, with likely formation of bullish engulfing on daily chart, to add to positive signals.
Daily studies improved on reversal of 14-d momentum after a brief probe into negative territory and RSI turned north from neutrality zone.
Today’s close above 108.84 (broken Fibo 38.2% of 110.77/107.65) is seen as a minimum requirement to keep fresh bulls in play, while lift and close above 10DMA (109.37) would strengthen bullish structure for further recovery.
Res: 109.33; 109.58; 110.00; 110.22.
Sup: 108.84; 108.38; 107.78; 707.65.
