The dollar index’s strong rally yesterday showed its true color. With 100% projection of 88.25 to 90.93 to 89.22 firmly taken out, we’re more confident that it’s an impulsive move. Further rise is expected in near term to 161.8% projection at 93.55. Reaction from there, as well as 94.19 fibonacci level, will reveal how powerful the impulse is. For now, near term outlook will remain bullish as long as 90.93 resistance turned support holds.
The impulsive nature of the rebound from 88.25 is a critical element to the case of medium term trend reversal. We’d believe that fall from 103.82 has completed at 88.25 after drawing support from 50% retracement of 72.69 to 103.82 at 88.25, on bullish convergence condition in weekly MACD. It’s early to say whether rise from 88.25 is resuming the long term up trend. But for now, there should at least be a solid break of 38.2% retracement of 103.82 to 88.25 at 94.19. And prospect of reaching 61.8% retracement at 97.87 and above is high.
