Dollar Index stands at the back foot ahead of key US data

The dollar index holds keeps negative stance for the fourth straight day and hit the lowest in one month in European session on Tuesday.

Renewed risk appetite and lower US yields deflated the dollar, which fell nearly 0.6% on Monday (the biggest daily drop since July 13).

Fresh bears cracked pivotal supports at 105.43/28 (Fibo 38.2% of 102.84/107.00 upleg / Oct 11 trough) with firm break here to generate strong bearish signal (completion of failure swing on daily chart) for deeper drop towards Fibo supports at 104.94/44 (Fibo 50% and 61.8% respectively) and unmask top of rising thick daily cloud (104.26).

On the other hand, failure to register clear break lower would put immediate downside risk on hold and keep the price in prolonged consolidation (currently within 105.14/106.55 range).

Initial positive signals to be expected on lift above converging daily Kijun-sen / Tenkan-sen / (105.67/84), but recovery needs close above 106.04 (Oct 13 lower top) to confirm formation of a higher base and signal an end of corrective phase from 107.03 (2023 peak of Oct 3).

Traders await release of key US economic indicators this week (Manufacturing / Services PMI’s today; GDP on Thursday and PCE index on Friday) which will provide fresh signals of the condition of the US economy and more clues about the Fed’s steps in the next week’s policy meeting.

Investors will also continue to closely watch geopolitics, which were the main market driver in past few weeks.

Res: 105.67; 105.84; 106.04; 106.55
Sup: 105.14; 104.94; 104.44; 104.17