BUZZ-COMMENT-Dollar has big guns in its arsenal

The last full trading week of August, and the monthly chart shows dollar index sellers baulking ahead of big long-term support levels.

The dollar has the 30-month lower Bollinger line at 91.8690, 100-week moving average at 91.713 and monthly cloud base at 91.363 fighting its corner.

Short-term dollar fluctuations towards its trend lows hint at a slowing in supply and, coupled with major support points close to market, could lead to a large rebound.

Last week's price action delivered a bullish signal, and if the hammer candle pattern draws confirmation this week, the technical outlook for the dollar index could improve significantly.

The bear market has failed to hold the dollar down at its weekly low points and this has led to long lower shadows (bullish) on the candle chart.

Fundamentally, the dollar should also be underpinned by stimulus, and as COVID-19 cases begin to slow in the United States and increase in Europe, the divergence should lean on EUR/USD, which continues to defy a saturated long EUR market.

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Dollar Index weekly candle chart: https://tmsnrt.rs/3aRVxcX

Dollar Index monthly Ichimoku chart: https://tmsnrt.rs/3j8l04v

(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

((peter.stoneham@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.