US Dollar Index
The Dollar Index remains firmly in the red, holding near fresh four-month lows in early trading on Thursday, following Wednesday’s 1.2% post-Fed drop (the biggest one-day drop since Nov. 14).
The greenback was deflated by signals that the Fed’s historic policy tightening cycle is likely over and projections showing borrowing costs would fall next year, with growing bets for a first rate cut in March and expectations for 150 basis points of easing in 2024.
Wednesday’s sharp decline has fully retraced 102.36/104.24 corrective leg, with break of former low at 102.36 (Nov 29) signaling continuation of larger downtrend from 107.03/106.96 double top (2023 highs of Oct 3 / Now 1).
Daily closes below 102.36 and 102.19 (Fibo 61.8% of 99.20/107.03) will be needed to confirm the signal and open way towards 101.05 (Fibo 76.4%).
Bearish daily studies (MA’s in full bearish setup / 14-d Momentum in negative territory) support this notion, with corrective rallies to be capped below 102.90/103.11 zone (base of thick weekly cloud / falling daily Tenkan-sen) to keep larger bears in play and offer better selling opportunities.
