Bulls are taking a breather under new 20-year high
The dollar is consolidating under new 20-year high, hit in Asia on Monday, as Fed signaled it will maintain its hawkish stance and go for another large rate hikes, that makes the greenback attractive, while traders continue to move into safety on growing uncertainty.
The dollar index peaked at 114.42 on Monday (the highest since May 2002), in extension of last Friday’s 1.6% rally and 3.2% advance of the last week, being on track for the fourth straight strong monthly rally.
Subsequent easing on strongly overbought conditions was so far limited by Fibo support at 112.82 (23.6% of 107.65/114.42 upleg) keeping bulls intact.
Overall structure remains very bullish as a cocktail of negative factors continues to pressure the most of major currencies and the greenback remains strongly underpinned by hawkish Fed and safe haven flows.
Extended consolidation is likely to precede fresh push higher, with dips to ideally stay above 112.82 support, but extended downticks cannot be ruled out as conditions are still overbought.
Key supports at 111.83/73 (Fibo 38.2% / rising daily Tenkan-sen) need to contain and keep bulls in play.
Res: 114.42; 115.08; 115.81; 117.00
Sup: 112.82; 112.00; 111.73; 111.03