Improved risk sentiment keeps the dollar under pressure for deeper correction

The dollar index fell to one-month low on Tuesday, in extension of Monday’s 0.85% drop, under increased pressure from renewed risk appetite.
Hawkish comments from ECB’s President Lagarde that the European Central Bank is likely to start raising interest rates in the third quarter, added to improved risk sentiment and further weighed on the greenback.
The dollar is in corrective phase from new multi-year high at 105.04 (the highest since 2002) and generated fresh bearish signal on Monday’s break through pivotal Fibo support at 102.24 (38.2% retracement of 97.72/105.04 ascend), which looks for confirmation on sustained break lower.
Bears eye next target at 101.38 (50% retracement), with stronger acceleration to risk drop towards strong support at 100.51 (Fibo 61.8% of 97.72/105.04 / top of ascending daily cloud).
Daily studies turned into bearish mode, as 14-d momentum moved into negative territory and converged 10/20DMA’s are about to form a bear-cross, with weekly indicators heading south after reversing from overbought territory, adding to negative signals.
Also, monthly studies are overbought and the index is on track for a monthly close in red after strong rally in past two months (up 6.6%), with bearish monthly candle with long upper shadow, which also signals a bull-trap above key 103.80 resistance, warning that larger bulls have lost traction.
On the other side, fundamentals are expected to remain dollar’s key driver, as fears of escalation of the conflict in Ukraine, and concerns about many developed economies are facing recession, keep investors cautious and ready to accelerate migration into safety at any time that would limit dollar’s correction

Res: 102.24; 102.96; 103.31; 103.47
Sup: 101.73; 101.38; 100.87; 100.51