Today, the dollar index (DXY) is higher following the last few week’s savage decline. From the October high of 99.63 the USD index declined by 2.54%.
Soft ISM readings for the US triggered the slide in the Dollar at the start of October, and news of the EU and UK agreeing to a new divorce deal added to the hurt and sent the British Pound soaring and the Dollar lower. It now looks like the UK will avoid a hard Brexit, and that might temper GBP gains.
Technically, the dollar index left oversold territories last week as the RSI-14 reached the oversold level of 29. The index did, however not reach the lower and green ascending trendline, as seen in the chart below. The trendline is a part of several trendlines that have explained the price action in the dollar index since October 2018.
As the USD did not reach the lower trend line but bounced from oversold RSI levels it is sending a mixed-signal, and it would not surprise me if the dollar tries to test last week’s low before heading higher. Near term resistance is the October 18 high of 97.65, followed by the October 17 high of 98.11.
The next essential data points that could move the Dollar are Thursday’s European and US PMI indicators, and of course the ECB rate meeting.Download our latest quarterly market outlookfor our longer-term trade ideas.
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