Dollar extends weakness after downbeat US PMI data but bears face headwinds from strong supports
The US dollar fell further against the basket of major currencies on Wednesday, pressured by weaker than expected US PMI data.
Although the US factory activity index rose to record high in June, Services PMI dropped significantly (June 64.8 vs May 70.4 and 70.0 f/c) and Composite PMI which tracks the activity of both sectors and indicates the health of the economy, fell from May’s peak at 68.7 to 63.9 in June.
The dollar index holds firmly in red for the third straight day and retraced over Fibo 38.2% of post-Fed strong bullish acceleration, as today’s fresh bearish extension penetrated thick falling daily cloud (spanned between 91.55 and 90.51) and cracked 200DMA (91.49) questioning Fed-induced dollar’s short squeeze.
In addition, upbeat EU PMI data for June inflated the single currency, and increased bearish pressure on greenback.
Fading bullish momentum on daily chart warns of further weakness, but fresh bears need a daily close below 200DMA to confirm negative signal.
Caution on strong headwinds that bears face from strong supports provided by daily cloud and 200DMA which would contain the pullback and sideline immediate downside risk.
Res: 91.88; 92.12; 92.38; 92.52
Sup: 91.49; 91.13; 90.94; 90.36