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The dollar's last hope to hold on to its uptrend

10 November 2022 59
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For the last two months the dollar index has been holding in a flat, and as it looks like the highs are getting lower. Yet the support level of 109-110 is still relevant. There is a withdrawal of overbought amid the rally of recent months.

 

The fundamental background has almost remained unchanged over the last week. For ourselves, we distinguished one significant news which is the mixed report on the U.S. labor market. The report demonstrated a slowdown in the employment rate and a growth of the unemployment rate. It can be seen as the first signal of a coming inflation reversal and a softening of the U.S. monetary policy. We will see later if this theory will be confirmed but what can we see now?

 

The dollar index is now barely holding from breaking an uptrend that has appeared in January 2022. This is a strong support for the dollar price. It is also where the first Fibbo level is positioned. Therefore, there is a high chance of a bounce off this level.

 

The current dollar index price gives an opportunity to open long positions with a stop of 109 points. The breakdown of support, about which we wrote above, will occur at this level. The movement target is 112 points. It is a resistance expressed as a local downtrend.

 

In the short term it is preferable to open long positions on the dollar index.

 

Take profit — 112 points (green line on the chart)

Stop loss — 109 points (red line in the chart)

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