The Greenback got under pressure in reaction to President Trump’s criticism of Fed policy and his discomfort with the strength in the U.S. Dollar last Thursday, July 19th. This tweet by U.S. president boosted a sharp come back from the newly hit high above the psychological and tough resistance at 95x in the market, the level that the dollar index is struggling to break above for several weeks so far. Even the recent trade war and import tensions between U.S. and China has failed to help the dollar pass this zone.
With this summary in mind, let’s have a closer and more technical look throw its chart to figure out the most probable upcoming move.
Prior to get to the present price action, we’d like to go earlier to the beginning of 2018 when the Greenback started the year with a bounce back from its lifetime bullish channel at around 88 x after experiencing a two-year decline.
This zone was super critical as overlapping not only the channel line, but the 50% retracement level of the whole rally from 72x up to 103x as well. The bounce back was in action up until reaching 95x area, where equivalents the opposite 50% retracement of the fall from the top, down to 88x. This level has become so tough for the price to pass as it has failed for several times trying to.
It seems that the index is losing momentum to overcome the so-called resistive zone at this moment and this view point strengthens as the resistive time retracement also supports the reverse.
From the evidences mentioned earlier both fundamentally and technically, the most probable next move for the Greenback is to weaken at least at short term basis.
If this scenario happens first, the nearest solid support is laid at around 91x, overlapping 61.8% retracement of 2018 rally and the horizontal supportive low hit on late 2017.
On the flipside, any successful break and stability above the 95x zone stimulates the bulls to push the price toward 98x, the 61.8% retracement of the rally mentioned earlier.
The probable losses would exceed in case the vital support at 91x is penetrated and held below, where bears will get control of the market toward the 2018 low at 88x.
To sum up from previously mentioned factors, we believe that the uptrend so far can be over at least for a considerable time and the market is getting ready to start another sustainable down trend from now on. But it should not be forgotten that this scenario would be considered valid as long as the price holds below pivotal level of 95x.