The dollar index fell on Monday after Fed announced the new extraordinary set of programs in attempt to offset severe disruption to the economy on corona virus pandemic.
The US central bank decided to extend the use of ‘heavy artillery’ as situation could deteriorate further and become uncontrollable.
Increased stimulus and new facilities for larger employers are on the list of new measures, with new ‘Main Street Business lending program’ that will extend credit to small and medium-sized businesses to be announced soon.
Fresh measures would restore market’s confidence that was seriously hit by deepening corona virus crisis and prompted investors into massive dollar buying. Such scenario would push the greenback lower and signal correction after index registered massive gains in past two weeks.
Daily indicators started to point lower and attempt to reverse from overbought zone that would be supportive factor for deeper pullback.
Initial supports lay at 101.89 (last Friday’s spike low) and 101.62 (Fibo 23.6% of 94.59/103.80) and close below here would generate initial reversal signal, which would require verification on extension below 100.25/00 (Fibo 38.2%/psychological).
Caution of pullback’s stall as situation remains vulnerable on rising signs of global economy is entering recession that could offset positive impact from the newest measures and spark fresh dollar buying. Break above 103.80 is needed to confirm that bulls fully regained control.
Res: 103.16; 103.80; 105.00; 107.00
Sup: 102.05; 101.89; 101.62; 101.08