The dollar index continues to pull back to a new low
- On Tuesday, the dollar index managed to climb up to 104.80 level.
Dollar chart analysis
On Tuesday, the dollar index managed to climb up to 104.80 level. After the formation of the weekly high, the index began to lose volume and turn to the bearish side. We saw an attempt to hold above the 104.50 level, but it all ended in failure for the dollar. The decline did not stop there, but we saw a continuation today. During this morning’s Asian trading session, the dollar index initiated a strong bearish consolidation, falling below the EMA 200 and the weekly open price.
That step only strengthened the bearish momentum, which continued to push us lower to a new weekly low at 103.93. Even the potential support at the 104.00 level did not last, but we saw a break below. Based on the current picture, we can expect further retreat and a new lower low formation. Potential lower targets are the 103.90 and 103.80 levels.
The Fed decides tonight on the fate of the dollar, will it save it from further decline?
For a bullish option, the dollar index needs to stabilize above the 104.00 level to begin with. If the index succeeds in this, it can hope for a recovery and a move to the bullish side. After that, it should start a bullish consolidation and move to higher levels. Potential higher targets are the 104.10 and 104.20 levels.
We expect very important news from the US market tonight: the Fed will announce the future interest rate. This is a crucial event that could significantly influence the market. Economists forecast that the interest rate could remain at 5.50%. Half an hour later, we have a press conference that could indicate the Fed’s future monetary policy.
