The US dollar index (DXY) posted three solid days of gains between Thursday and Monday. I cannot say I am overly surprised to see A Doji formed yesterday given the resistance cluster around 103.50 which includes a previous support zone, trend resistance and the 50-day EMA. But we also had a change in sentiment for markets yesterday that were eager for a decisively hawkish message from Jerome Powell, which was not delivered. Therefore I suspect the US dollar needs a pullback or period of consolidation before its next leg higher. And I maintain my view that the US dollar remains oversold, and there is more upside on the horizon after its initial pullback is complete.
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It's played out like clockwork; nice pullback into suggested support area, ahead of the anticipated break.
Onwards and upwards?
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Onwards and upwards indeed. A slew of economic data and hawkish Fed speech after the Feb meeting (and now slightly hawkish FOMC minutes) suggests the US dollar remains oversold to our eyes.
Here's another trade idea for the same reasons to consider: