The U.S. dollar remains vulnerable as speculators' net short positions decrease , as is reflected on the recent sessions on the daily chart, but are still significant enough to potentially trigger a short squeeze. The USD index has found resistance at a key technical level of the reaction area around $1.04300 where the price found resistance in early June and is probably near a correction to the downside. The Federal Reserve Chair Jerome Powell's recent speech supported the dollar on the 24th and 25th and has hinted at possible interest rate hikes boosting the probabilities of such a hike for the November meeting of the FED according to the Fedwatch Tool of CME.
On the technical side the price has found sufficient support just above the weekly 78.6% of the weekly Fibonacci retracement level as well as the lower band of the Bollinger bands and is currently correcting to the upside. Usually but not always a move away after consecutive touches on the Bollinger bands means that a correction might be imminent. If this is confirmed and we do see a correction to the upside then the first area of possible technical resistance could be around the $1.090 which consists of the 61.8% of the weekly Fibonacci retracement level, the area of the 20 and 50 day moving averages as well as the psychological resistance of the round number.
The bullish narrative is also supported by the extreme oversold level on the Stochastic oscillator which is in effect for the last month as well as the fact that the faster moving average (50 days) is trading above the slower one (100 days) indicating that the overall bullish momentum is still in effect and a correction to the upside is quite possible.
On the technical side the price has found sufficient support just above the weekly 78.6% of the weekly Fibonacci retracement level as well as the lower band of the Bollinger bands and is currently correcting to the upside. Usually but not always a move away after consecutive touches on the Bollinger bands means that a correction might be imminent. If this is confirmed and we do see a correction to the upside then the first area of possible technical resistance could be around the $1.090 which consists of the 61.8% of the weekly Fibonacci retracement level, the area of the 20 and 50 day moving averages as well as the psychological resistance of the round number.
The bullish narrative is also supported by the extreme oversold level on the Stochastic oscillator which is in effect for the last month as well as the fact that the faster moving average (50 days) is trading above the slower one (100 days) indicating that the overall bullish momentum is still in effect and a correction to the upside is quite possible.