BUZZ-COMMENT-Fed influence cheers dollar bears but big obstacles loom
By early U.S. trade the dollar index had failed to break below the Aug. 18 low for the month at 92.124.
Once that breaks, they must to contend with key 91.70/80 support, which contains the May 2018 monthly low and 76.4% Fibo retracement of the 2018-2020 rally. The 76.4% Fibo is frequently a retracement level where reversals occur, implying the dollar could soon rally.
On Friday, lower U.S. interest rates fueled dollar losses. The U.S. Treasury 10-year yield fell after rallying near the 76.4% Fibo projection of the Aug. 6-13 rally. Gains in fed funds futures FFH1 prices drove short-term rates lower.
Dollar index =USD weakness came as EUR/USD rallied to 1.1920 and USD/JPY fell to 105.20. Similar to the dollar index, EUR/USD failed to breach its August monthly high while USD/JPY was unable to break its August monthly low.
Until they break below the dollar index's August lows and 91.70/80 support, bears should tread cautiously as the risk of a reversal grows.
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(Christopher Romano is a Reuters market analyst. The views expressed are his own)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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