The dollar index retreated to the 105.60 support level 

Dollar index chart analysis

The dollar index has been in bearish consolidation since the beginning of this week. On Monday, we saw the formation of a weekly high at the 106.39 level. This was followed by a pullback to the 106.10 support level. On Tuesday, the dollar encountered resistance at 106.20, and there, we formed a lower high compared to the day before.

Then, after yesterday’s news in the US session, we see a strong bearish consolidation up to the 105.60 level. During this morning’s Asian session, the index formed a new weekly low at 105.59 and, from there, started a bullish consolidation, returning above the 105.80 level. There, we get the support of the EMA200 moving average, and for now, we are successfully holding above it. We are currently at the 105.85 level and we expect a bullish impulse that would move us to the 106.00 level.

Can the dollar bounce back above the 106.00 level?

Above 105.90, we get a support and EMA50, establishing a bullish path recovery of the dollar index. Potential higher targets are 106.10 and 106.20 levels. We need a new drop below 105.80 and the EMA200 moving average for a bearish option. Thus, we are moving into a pressure zone, which would have a negative impact on the movement of the dollar. Potential lower targets are 105.70 and 105.60 levels.

In the US session, we will have news on Durable Goods Orders for March, Crude Oil Inventories and the 5-year Note Auction. Australian inflation data was released this morning in the Asian session. Inflation was higher than forecast, which will influence the RBA to leave the interest rate still high. On Friday, we are waiting for the US session and news about US GDP and Initial Jobless Claims.

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