Dollar may bounce if bears fail to break key supports
The dollar index stands at the back foot on Thursday, holding in red for the fourth straight day but stays for now above key supports at 98.99/86 (Wednesday’s low / 100DMA).
US weekly jobless claims came better than previous week and mainly in line with expectations, keeping alive optimism for fast recovery, which inflates risk mode.
Oversold daily stochastic and flat momentum would keep the downside limited as 100DMA reinforces the floor of seven-week range.
Dollar may bounce if these supports hold, as main components of the index (Euro; British pound and yen) are pressured. Euro is overbought vs the greenback, sterling is weighed by negative interest rate talks and yen is under heavy pressure on strong fall of Japan’s exports.
Return and close within daily cloud, following Wednesday’s marginal close below cloud base, would generate initial bullish signal which would require confirmation on close above the top of thickening daily cloud (99.86).
Conversely, near-term structure would weaken if pivotal supports at 98.99/86 give way.
Res: 99.44; 99.67; 99.86; 100.00
Sup: 98.99; 98.86; 98.75; 98.33