Dollar index – bulls remain firmly in play but may take a breather before attacking key resistance zone
The dollar index holds firm tone in early Thursday’s trading and pressuring 105.00 round figure barrier, ahead of more significant resistances at 105.13/47 (Fibo 38.2% retracement of 114.72/99.20 / weekly cloud base).
Wednesday’s better than expected US Aug non-manufacturing data improved the sentiment, along with signs of easing inflation, modest economic growth and slower labor growth, which add to growing hopes that the US economy will remain resilient and avoid worse scenarios.
Better performance of the US economy in comparison to other major economies also makes dollar more attractive for investors, together with signals that the Fed is likely to keep high interest rates for extended period.
Uninterrupted uptrend which extends into eighth consecutive week, approached key resistances (105.13/47), as well as 105.85 (Mar 5 lower top), break of which would spark fresh acceleration higher and expose initial targets at 106.22 (daily cloud top) and 106.96 (50% retracement of 114.72/99.20).
Be aware of possible headwinds here as barriers are significant and daily studies overbought, with dips to find ground above daily Tenkan-sen (103.91) to keep bulls intact.
Only break below 102.82 (200DMA / Aug 30 higher low) would sideline bulls and signal reversal.
Res: 105.13; 105.47; 105.85; 106.96
Sup: 104.37; 103.91; 103.67; 103.13