- Since the beginning of the year, the dollar index has been on an upward trend with a top forming at 102.80.
Analysis of the dollar index chart
Since the beginning of the year, the dollar index has been on an upward trend with a top forming at 102.80. On Wednesday, we stopped the previous upward wave at 102.70, after which the dollar returned to 102.20. Then we got the support that broke the 102.50 level during the Asian trading session. And so we rose to the highest level today.
Now, we need to hold above 102.60 if we want to start further recovery on the upside. Possible higher targets are 103.00 and 103.20 levels. We would have to go back to the support at 102.20 to get a bearish option.
With a break below, they would form a 2-day low thus confirming the bearish momentum. Possible lower targets are 102.00 and 101.80 levels. The 50 EMA is in an area around 102.00 levels, and it will be interesting to watch how the dollar behaves in that area.
Economic news and its impact on the dollar index
This week's mixed data boosted the dollar but failed to push it lower. This morning, CPI data from the Eurozone was published, which was negative for the Euro. The inflation rate fell to 2.9%, compared to expectations of 3.0%, but higher than the previous report, which was 2.4%.
In the afternoon, in the first hour of the US session, we have news on December non-farm payrolls, the unemployment rate and average hourly earnings, and a few hours later, the ISM non-manufacturing PMI and ISM non-manufacturing prices. The biggest focus is on the dollar. We can expect increased market volatility during that period.
