Bulls are taking a breather under new multi-year high, following strong rally in April
The dollar is consolidating just under new 20-year high, posted after a brief probe above former tops of 2017/2020 (103.80) and maintain firm bullish tone.
The greenback remains well supported by a number of technical and fundamental factors, which suggest that the currency could rise further.
A massive bullish monthly candle (April’s rally was the biggest monthly rise since Oct 2008) is expected to strongly underpin the action, along with bullish studies on larger timeframes).
On the other side, the dollar is supported by safe-haven buying on rising geopolitical and economic uncertainty, as well as hawkish tones from the US Federal Reserve, which signal multiple rate hikes until the end of the year, in attempts to put raging inflation (at the highest in 40 years) under control.
Meanwhile, the price action may stay on hold and possibly adjust further, as studies are overbought and traders may collect profits after 6.6% advance in March /April, while bulls face headwinds at key 103.80 barriers, after April’s rally failed to register a monthly close above these levels.
However, dips are expected to be shallow in current conditions of escalating geopolitical tensions and warning about global economic activity slowdown and offer better opportunities to re-join strong bullish market.
Rising 10DMA (102.02) should ideally contain and guard ascending 20DMA (100.95) and pivotal psychological 100 support, loss of which would put bulls on hold.
Res: 103.80; 103.93; 104.36; 104.65
Sup: 102.79; 102.02; 101.50; 101.01