Following our start of week analysis, the dollar index had been in a range since November. We saw really strong support and resistance zones between 95.530 and 96.900 respectively. From a fundamental perspective we had the Fed Chair Powell testify whereby the remarks were dovish causing the pair to break out of the range with a lot of momentum to the downside.
Moreover, on Wednesday we had the release of the monthly consumer price index (CPI) which came in lower than the previous month by 0.3%. There was minor improvement in the core CPI of 0.1%, followed by drop of 0.6% in the PPI on Thursday.
Still to anticipate with the open of US session today is the core retail sales m/m as well as the retail sales both of which are expected to come in lower than in December.
Turning back to the technical aspect, the index is approaching the next support at 95.634 after cruising past all other supply zones above the level. Should this zone give in to the bears, we’re looking to fall even further to the next level at 93.820.
As always my question to you is, what leverage do the bulls have going for them, or is this the reversal looking to potentially wipe the gains for the index since June 2021?