The Dollar Index ticks higher in early European trading on Thursday, from new lowest level since Dec 23, hit after release of FOMC July policy meeting.
Minutes showed that the US policymakers remain on track for rate cut in September, as inflation eased and significant signs of weakness in the labor market, further support the anticipated scenario.
The dollar was in steep bear-leg in past four days (part of broader downtrend) in expectations that Fed will confirm its dovish stance, suggesting FOMC decisions have been already priced in and ‘sell the rumors-buy the facts’ scenario likely to follow.
Deeply oversold daily studies contribute to signals that it is a time for partial profit taking, as markets expect next key event of the week – the speech of Fed Chair Powell in Jackson Hole on Friday, which is expected to provide more details about the depth and the pace of Fed policy easing and generate fresh direction signal.
Powell is unlikely to diverge from Fed’s general direction, therefore expected to maintain dovish stance, that will contribute to expectations for limited correction before bears regain control.
Solid resistances at 102.00 zone (former low of Aug 5 at 101.94 and falling 10DMA at 102.08) should ideally cap and provide better selling opportunities (on anticipated dovish comments from Fed Powell) for push towards targets at 102.29/18 (Dec 28 low / 200WMA) and psychological 100.00 support.
Conversely, stronger acceleration higher and violation of pivotal 102.80/103.00 resistance zone, would question larger bears.
Res: 101.54; 101.73; 102.00; 102.61.
Sup: 100.75; 100.29; 100.18; 100.00.
