On Tuesday (November 1) subsession, the rush high fell back, temporarily traded at 111.39, down 0.18%.
Unicredit’s research team says the dollar rally could stall if it signals that interest rate hikes may not be as aggressive.
The Fed is expected to raise interest rates by another 75 basis points on Wednesday, but a less aggressive tightening outlook could be negative for the dollar.
If the Fed supports a slower pace of rate hikes, the dollar index should pull back to 110 and should surpass recent highs around 1.090.
“I think the dollar in general is consolidating,” said Amo Sahota, managing director at consultancy Klarity FX.
A lot of the news has already been digested.
If the dollar is going to rise further, I think it will be relatively modest.
Overall, the dollar is somewhere in the middle of a curve — trying to make a high, but largely failing to do so.
I think there’s a sense of fatigue in this trade.”
The dollar index has short term support at 111.30/111.35, the important short term support at 110.90/110.95.
