The Dollar Index (DXY) is exhibiting signs of recuperation, suggesting a channel trading opportunity. The DXY's recovery is set against a backdrop of a consolidating EUR/USD, which has remained resilient above 1.108.
Technical analysis: The Dollar Index is trading inside of a channel it created in the last 3 trading weeks. The DXY is challenging the 103.60 support zone, which, if breached, may open a pathway to lower levels. Also, the index is testing the resistance of the channel around 104.30 Conversely, resistance around 104.55 remains a cap for upward movements.
Our position: We remain cautious, monitoring DXY's interactions with key levels for signs of either a potential bearish reversal and breakout from the channel indicating an end of the current consolidation phase or a bullish continuation. With NFP data pending, coming out on Friday, we expect these releases to direct the subsequent market movements.
Technical analysis: The Dollar Index is trading inside of a channel it created in the last 3 trading weeks. The DXY is challenging the 103.60 support zone, which, if breached, may open a pathway to lower levels. Also, the index is testing the resistance of the channel around 104.30 Conversely, resistance around 104.55 remains a cap for upward movements.
Our position: We remain cautious, monitoring DXY's interactions with key levels for signs of either a potential bearish reversal and breakout from the channel indicating an end of the current consolidation phase or a bullish continuation. With NFP data pending, coming out on Friday, we expect these releases to direct the subsequent market movements.