Good morning everyone. As you know, markets are in a bit of a tricky situation. Metals have been in a sharp sell off over the last week or so, and the technology sector is also turning lower, especially with AMD seeing a sharp sell off after earnings. This environment is keeping the dollar supported.
For the dollar, there are two important events that can impact the move in the dollar index. First, we have the ECB rate decision today. No major changes are expected, but the recent strength of the euro could bring more dovish views into focus, which may cause some additional selling pressure on the euro. That would naturally support the dollar. Second, with tech turning down, cryptocurrencies moving lower, and metals correcting, this backdrop remains supportive for the dollar.
Looking at price action, the recovery from the January 27 lows is already showing impulsive characteristics, with clear extensions higher from the 96 support. In the near term, some pullbacks would be normal, but we need to watch closely whether any setbacks remain temporary. If by the end of the week the dollar stays strong, then a more important dollar bottom could be forming. On the other hand, if we see an overlap back below 96.80, then dollar weakness would likely resume for a final retest of the 95.50 area.
Grega
1st #BTCUSD , then #XAGUSD and #XAUUSD, who is next?
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