Dollar index gets rejected by the resistance "air pocket"
The rebound in the dollar met a reality check on Friday as sellers in North American trading pounced on the opportunity to send the greenback lower. The dollar touched the key resistance area between 95.15 and 95.53 in European trading, but ultimately those gains were short-lived as the dollar index ended lower for the day.
With Japanese traders on a break to start the week, we'll have to wait for European traders to have their say on whether or not this rejection will lead to something more.
But for now, buyers are still in control of the momentum in the dollar index:
The hourly chart shows that the retracement to the downside so far hasn't quite yet breached below the 100-hour (red line) and 200-hour (blue line) moving averages, and that will be a key region to watch in case of a downside move today.
Stay above that, and the momentum will continue to favour a more bullish outlook in the near-term. As for sellers, there's still support around the 94.66 region that they need to navigate through before a test of the region highlighted.
But the crucial level in any downside move for me will be the 9 July low @ 93.71 - more specifically a daily close below that level. Should sellers manage that in a downside move from today onwards, it could be a start of a downside pattern in the dollar (lower highs, lower lows). But we'll get there when we get there, in trading nothing is certain so don't look into the crystal ball but instead look at what the chart is saying now.
