The dollar index is under pressure from central banks
- The dollar index is in a bearish consolidation after forming a high at the 103.69 level last Wednesday.
Dollar index chart analysis
The dollar index is in a bearish consolidation after forming a high at the 103.69 level last Wednesday. After that, we see a retreat that has continued today. During the Asian session, the index formed a three-day low at 103.11. We successfully stopped there and initiated a bullish consolidation up to 103.32 levels. We take a little break there, and since then, we have been in the 103.25-103.30 range.
We need a stronger impulse that would break through that resistance and push the dollar to continue to the bullish side. Potential higher targets are 103.40 and 103.50 levels. We need a negative consolidation and pullback below today’s support at the 103.11 level for a bearish option. With that breakthrough, we would confirm the bearish momentum to continue on the bearish side. Potential lower targets are 103.00 and 102.90 levels. EMA200 moving average is in the zone around 103.00 levels.
Central banks and interest rates decisions will create the trend this week.
Today at 15:00, we can follow the speech of the President of the EBC Lagarde on the future monetary policy and potential steps on the future level of the ECB interest rate. Tomorrow, in the Asian session, the Bank of Japan will announce its interest rate forecast, and after that, we have a press conference by Bank of Japan officials.
On Wednesday, the Bank of Canada will announce its decision on future interest rates. It is expected to remain at the same level as before at 5.00%. On Thursday, the focus is on the ECB’s decision on its interest rate. Forecasts are that there will be no changes in monetary policy and that the interest rate will remain at the same level. Fifteen minutes later, US GBP data for the fourth quarter will be released. The forecast is GDP will fall to 2.0% from 4.9% in December. Based on this news, we can expect turbulent events on the market.
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