The US dollar retreated from some of its weekly gains after an advanced GDP reading disappointed market expectations.
Are we looking at an opportunity to buy the dollar at lower levels?
We zoom in on the 4-hour chart to check the range setting:
US Dollar Index (DXY) 4 Hour Forex Chart by TV
In case you missed it, the US dollar had a strong start to the week, as rising US bond yields and speculation of higher inflation (and longer Fed rate hikes) under a Trump presidency pushed the US dollar higher.
However, the US dollar gave up some of its gains, thanks in part to uncertainty ahead of the US elections and a surprisingly weak advance in the third-quarter GDP report.
Remember that directional biases and volatility conditions in market prices are usually driven by fundamentals. If you haven’t done your financial homework on the US dollar yet, it’s time to check the economic calendar and stay up to date with daily essential news!
The US Dollar Index (DXY) recently retested Friday’s lows near 104.00, but also found buying pressure around the psychological zone.
Watch for more green candles above 104.00, which is located near the pivot point line (104.10) and the range support area on the 4-hour chart. Further gains could lift the dollar index to medium term levels at 104.30 if not the previous high of 104.60 and the range resistance area.
But what if the US dollar bears just took a breath?
If the DXY makes new weekly lows and trades consistently below range support, we could see an increase in the odds of a long-term bearish reversal for the USD.
Watch for continued trading below 104.00, which could pull the dollar index to 103.60 S1 levels or the 103.50 area of interest near the 100 SMA.
Good luck and good trading this setup!