Dollar loses ground as US inflation establishes in a downward trajectory
The dollar index accelerated lower on Thursday after holding in a sideways mode in past two days, hitting new lowest in seven months.
The greenback was deflated by US CPI data which indicate that price pressures are easing and inflation is establishing in downwards trajectory, adding to expectations that the US central bank would further slow the pace of rate hikes.
The data also pointed to lower impact of high interest rates to economic growth that would lead to the US economy’s soft landing, against earlier expectations for deeper recession.
Fresh weakness also signals a continuation of larger downtrend, which paused in past four weeks, as bears broke into ascending weekly cloud and pressure pivotal Fibo support at 101.94 (50% retracement of larger 89.15/114.72 uptrend, reinforced by monthly Kijun-sen), break of which would expose targets at 100.44/00 (weekly cloud base / psychological).
Daily studies are in full bearish setup, with additional pressure seen from 55/200 DMA death-cross, though oversold conditions warn that bears may lose pace.
The action should be ideally capped by solid barriers at 103.52 (10DMA) and 103.67/74 (weekly cloud top / 20DMA) to keep bears intact.
Res: 103.07; 103.52; 103.74; 104.14
Sup: 101.94; 101.29; 100.44; 100.00