The dollar index is down by more than 0.2% on the day
This comes after buyers made an attempt to move above the 95.50 level in overnight trading and as the three other times this year, there was no firm break or follow through in the upside move. The dollar index closed the day at 95.36 and has moved lower today as equities rally - resulting in a stronger yuan which is helping to push the dollar weaker as well.
In the three previous attempts mentioned, the failure to close above the 95.50 level has seen the dollar index slip to at least 94.20 with the low of 93.72 posted on 9 July after buyers saw their second attempt falter.
Will this be the case once again? Right now, the 27 October high @ 95.15 will be an area to look out for in terms of support but the key would be to watch out for the near-term momentum in the hourly chart:
Price continues to stay above both key hourly moving averages so buyers are still in control but the break of the upwards trendline from last week isn't an encouraging sign for the time being. However, if price holds above the 100-hour MA (red line) @ 95.05 then there is reason to believe that the retracement here will not lead to further declines. Further support is then seen from Friday's low @ 94.98 and the 200-hour MA (blue line) @ 94.77.
Those will be the first few key levels to look out for if the dollar is to further retrace the gains seen in the last week.
I am no prophet so I can't tell you if the dollar index will bounce off those support levels or head towards 94.20, but from the charts above you can see how risk can be defined and limited so use that along with your bias to build your trade conviction.
