USD INDEX – Powell did not provide any signal of a pace of tightening but somewhat hawkish tone inflated the greenback
The dollar was higher across the board as Fed Chairman Powell stayed in line with existing stance regarding monetary policy, but somewhat hawkish tone firmed the greenback, which lacked spark for stronger rally, expected on more hawkish tone from the testimony.
Powell said that economic outlook remains balanced, but inflation is still a problem. As expected, he did not hint any change in pace of rate hikes this year, favoring gradual tightening, which will depend on inflation and labor.
The dollar index spiked above 90.00 barrier and came ticks ahead of last week’s recovery high at $90.16.
Fresh rally after shallow pullback from 90.16 high which was completed in two-day consolidation, turns focus higher again, as daily MA’s (10/20/30) are in bullish setup, but weakening momentum studies on daily chart warn of recovery stall.
The index is still holding within consolidation range after the latest bear-leg from 94.22 (12 Dec lower top of broader downtrend from Jan 2017 high) found footstep at 88.14 (16 Feb low) and firm break above range top and pivotal barrier at 90.44 ( 09 Feb recovery high / Fibo 38.2% of 94.22/88.14) is needed to generate stronger bullish signal for extension of recovery and confirm double-bottom at 88.24/14 (25 Jan / 16 Feb lows).
However, dollar’s recovery attempts may run out of steam as Powell did not provide any signal of more significant steers in the US monetary policy, regarding increasing pace of tightening in 2018 and from technical point of view, the price remains weighed by falling daily Ichimoku cloud.
Failure at initial 90.16 barrier would signal extended consolidation, while stronger negative signal could be expected on break below congestion floor and Monday’s low at 89.41
Res: 90.16; 90.44; 90.82; 91.18
Sup: 89.61; 89.41; 89.15; 88.91