If you missed our most recent Daily Broad Market Recap, Uncle Sam released lower-than-expected manufacturing and services PMIs in April, which caused the US dollar to lose ground.
See, the Fed's interest rate cut bets were retracted due to worse economic prospects, which also focused attention to other big economies' comparatively stronger PMIs.
The dollar index is currently trading near the 105.60 level, just below the S1 (105.73) Pivot Point support zone, after breaking out of its consolidation well above the 106.00 psychological barrier.
Could this be the beginning of a long-term negative trend? Or is this only a reversal after a few weeks of rising prices?
Could this be the beginning of a long-term negative trend? Or is this only a reversal after a few weeks of rising prices?
Given that it aligns with a support and resistance zone from earlier this month, the S2 (105.35) level is one to keep an eye on. What's more, it's close to a trend line support that has been in place since late March and the 100 SMA.
The dollar can return to its consolidation above the 106.00 level if it bounces off S2. Then, we might witness a shift to higher possible inflection points like R1 (106.51) or R2 (106.90) Pivot Point lines, depending on overall dollar demand.
However, if DXY continues its downward trend or maintains a price below our indicated trend line, this might indicate a longer-term bearish run for the currency index. If the trend line breaks below, watch for possible swings back to previous areas of interest, such as 104.50 or 104.00.
