- The dollar index is undergoing a bearish consolidation after forming a high of 103.69 last Wednesday.
Analysis of the dollar index chart
The dollar index is undergoing a bearish consolidation after forming a high of 103.69 last Wednesday. After that, we see a continuing decline until today. During the Asian session, the index formed a three-day low of 103.11. We managed to stop there and started an upward consolidation up to 103.32 levels. We took a short break there, and since then, we have been in the 103.25-103.30 range.
We need a stronger push that will break through that resistance and push the dollar to continue to the upside. Possible higher targets are 103.40 and 103.50 levels. We need negative consolidation and a pullback below today's support at 103.11 for a bearish option. With this breakout, we confirm the continuation of bearish momentum on the downside. Possible lower targets are 103.00 and 102.90 levels. The EMA200 moving average is located in the area around 103.00 levels.
Central bank and interest rate decisions will create this trend this week.
Today at 15:00, we can follow ECB President Lagarde's speech about future monetary policy and possible steps regarding the future level of the ECB interest rate. Tomorrow, in the Asian session, the Bank of Japan will announce its interest rate forecasts, and after that, we have a press conference by Bank of Japan officials.
On Wednesday, the Bank of Canada will announce its decision on future interest rates. It is expected to remain at the same previous level of 5.00%. On Thursday, the focus will be on the European Central Bank's interest rate decision. Expectations indicate that there will be no changes in monetary policy and that the interest rate will remain at the same level. Fifteen minutes later, GBP/US data for the fourth quarter will be released. GDP is expected to fall to 2.0% from 4.9% in December. Based on this news, we can expect turbulent events in the market.
