USD Consolidation Ahead of Next Move Higher; EURUSD to Suffer
US DOLLAR INDEX (DXY) CHART THROWS UP DIFFERING TECHNICAL SIGNALS The recent bout of US Dollar Index (DXY) strength, driven largely by a recently hawkish testimony from new Fed chair Jerome Powell, has covered the chart with a variety of bullish signals, although momentum seems overstretched at the moment. A period of consolidation is likely before the next push higher. Bullish technical DXY indicators include a strong ‘double-bottom’ made on February 15 – 15 around the 87.90-87.95 which coincided with extreme ‘oversold’ market conditions. The subsequent rally has seen DXY break back above the 20- and 50-day EMA and trade at levels last seen five weeks ago. Ahead a gap on the January 12 bear candle between 90.66 and 91.37 is likely to be filled which would also take DXY above its 100-day EMA, another bullish indicator. And if dollar bulls need another sign, DXY has just made four higher lows and higher highs in a row, although current price action may change the latter. The stochastic indicator on the bottom of the chart however shows the dollar in extreme ‘overbought’ territory and may keep DXY back in the short-term before the next push higher.