(Kindly note this was recorded at the start of the week, however delay in other article being posted, but all remains relevant)
The USD bulls are enjoying a storming run to the upside, pushing to the highest levels seen in four weeks. There isn’t one particular catalyst, but rather a few factors to consider, as detailed in the article here.
Let’s take a look at some technical observations around DXY, it is important we keep an eye on this, as a strong reference point for any USD related pairs/crosses.
Price action via the monthly chart view has been running north for two consecutive months so far. Foundations were laid in January, with a morning star candlestick, followed up by further buying pressure in February. It has seen the USD index (DXY) bounce some 2.55% off the worst levels produced at the start of 2021, since March 2018. The huge monthly support region from 90.00 - 89.00 has been pivotal in the dollar’s current recovery run.
The current pullback still remains vulnerable unless a key weekly area is broken down by the bulls, which should be noted at 91.50. A big rejection was observed there at the start of February, which triggered two steep weeks of selling.
A bullish flag structure had been containing the price from 2 - 25 February, which saw the bulls largely capitalizing on, smashing out of this in the session of Friday 26 February. There has been much momentum to the north since the breach, however as detailed the 91.50 region will need to be tackled by the bulls.
Despite all the above, markets appetite for risk has been very dominating, the intentions to buy the dips seen in riskier FX and assets in general remains evident. There is much focus on the global recovery, which does appear to be promising as demonstrated in key economic data points. Keeping this in mind, as per the previous USD article, rallies will remain vulnerable for the safe-haven.
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