Several factors continue to fuel dollar’s near-term bullish stance
The dollar is holding near new multi-week high in early European trading on Thursday, keeping firm tone on increased safe-haven demand.
Several factors contribute to greenback’s recent strength, with persisting uncertainty over the US debt ceiling crisis (talks are underway with some optimistic signs but so far without a deal), health of banking sector and clouded global economy’s outlook.
Also, the latest comments from Fed policymakers point to the central bank’s renewed hawkishness in fight against still too high inflation and conflict with recent signals about pausing tightening cycle, while hints about possible rate cuts have been sidelined for now.
The dollar is correcting the latest leg of broader downtrend from 114.72 (Sep 2022 peak), with larger picture remaining bearish, while bulls regained control on daily chart.
Wednesday’s close above pivotal Fibo resistance at 102.52 (38.2% of 105.85/100.45) and penetration of thickening daily cloud (cloud base lays at 102.68) generated bullish signals which require confirmation on break above next key levels at 103.15/26 (50% retracement / daily cloud top).
Overbought stochastic warns that bulls may lose traction on approach to strong 103.15/26 barriers.
Shallow consolidation / correction should ideally find ground above solid supports at 102.52/28 (broken Fibo 38.2% / 55DMA) to keep bulls intact.
Caution on extension below rising 10DMA (101.95) which would weaken near-term structure.
Res: 103.15; 103.26; 103.79; 104.16
Sup: 102.52; 102.28; 101.95; 101.65