Dollar Index: Still Bullish, But Below 93.00 May Change Scenario

Dollar Index: Still Bullish, But Below 93.00 May Change the Scenario.

The US Dollar broke out of a brief downtrend in late September as the Federal Reserve signaled they might raise rates faster than expected.

The break was driven by proper motive and significant as it allowed for more years supply, fueled inflationary fears that have been present all year long to keep Treasury yield movements hot going into new deadlines on Wednesday night.

The US Dollar Index dipped to the three-week low on Thursday before bouncing off one-month-old horizontal support. Also challenging this DXY weakness is sluggish momentum and a 200-day moving average which has been in favor of buyers since reversing from its yearly top around mid-January 2019.

Sluggish market conditions pressured the greenback gauge but not so heavily. Still, it took bids near 93.50 during Monday's Asian session as traders await economic data releases later today that might spark renewed interest among investors who had initially sold their positions due primarily to inflationary pressure.

It's worth noting that the US Dollar Index portrays a short-term falling wedge bullish chart pattern on four hours chart. Hence, confirmation of this stated formation with an upside break of 93.70 may open the door for 94.50.

As long as DXY holds above 93.00, there is still the chance to test 94.50 again. But the market is still concerned about inflationary pressure, so breaking below 93.00 will create a selling opportunity for the DXY. We should not think about selling before breaking below 93.00 points.

Breaking below 93.00, our first target is 92.50. After that, we may see some upward correction from 92.50. On the other hand, breaking below 92.50 will open the door for 91.50 points. And final target to the downside is 89.50 points.