According to the US Dollar Index, the US dollar gained 1.4% last week and settled at session tops. Additional outperformance, however, is questionable. The primary trend remains to the downside, yet the recent push has lifted daily prices to fresh highs, a move gesturing early signs of a trend reversal. With that being said, though, there is scope to pursue deeper water on the monthly timeframe until support from 99.67, and daily flow concluded the week welcoming resistance around 102.50ish (made up of the 50-day simple moving average, a 38.2% Fibonacci retracement ratio at 102.76 and a 100% projection at 102.65 ). Consequently, this could deliver a potential sell-on-rally scenario for sellers to work with this week.
Alternatively, continuation buying could unfold, lifting the Dollar Index beyond the aforementioned daily resistance, and placing the technical spotlight on daily resistance from 103.85, followed by a daily decision point at 105.35-105.15. Supporting a move higher over the coming weeks, aside from early signs of a trend reversal on the daily scale, is the Relative Strength Index (RSI) crossing above its 50.00 centreline (positive momentum) on the daily chart, with the monthly chart’s indicator still toying with the possibility of testing the 50.00 centreline as support (aligns closely with indicator trendline resistance-turned-support taken from the high 82.87).
So, daily resistance will be a key base to monitor this week at around 102.50. Rejection opens the door for a possible sell-on-rally setup; rupturing resistance, nevertheless, paves the way for breakout buying, targeting daily resistance at 103.85.
Alternatively, continuation buying could unfold, lifting the Dollar Index beyond the aforementioned daily resistance, and placing the technical spotlight on daily resistance from 103.85, followed by a daily decision point at 105.35-105.15. Supporting a move higher over the coming weeks, aside from early signs of a trend reversal on the daily scale, is the Relative Strength Index (RSI) crossing above its 50.00 centreline (positive momentum) on the daily chart, with the monthly chart’s indicator still toying with the possibility of testing the 50.00 centreline as support (aligns closely with indicator trendline resistance-turned-support taken from the high 82.87).
So, daily resistance will be a key base to monitor this week at around 102.50. Rejection opens the door for a possible sell-on-rally setup; rupturing resistance, nevertheless, paves the way for breakout buying, targeting daily resistance at 103.85.