The dollar maintains firm near-term tone and consolidating after strong rally on Friday (up 0.56% for the day) and following the biggest weekly advance in six weeks.
Expectations that the US Federal Reserve might signal a shift in the outlook for monetary policy in in their meeting this week, keep the dollar at the front foot, but investors remain cautious on consensus expectations the Fed will remain on hold until 2023.
On the other side, recent surge in inflation point to increase in price pressures on accelerating post-pandemic recovery that may prompt the central bank into earlier than expected stimulus tapering.
Daily technical studies are improving on fresh positive momentum and moving averages (10/20/30) turned to bullish setup.
Weekly chart also shows an initial signs of reversal following five consecutive weekly failures to register close below cracked psychological $90 support that points to formation of bear-trap pattern.
However, fresh bulls would require more evidence to signal reversal, with sustained break above 91.00 (Fibo 38.2% of 93.45/89.50/100DMA) to confirm pattern.
However, verdict from the US central bank after two-day policy meeting which ends on Wednesday, would provide more clues about dollar’s near-term direction.
Res: 90.60, 91.00, 91.41, 91.55.
Sup: 90.21, 90.00, 89.81, 89.63.
