The U.S. dollar pulled back some of its weekly gains after an advance GDP reading disappointed market expectations.
Are we looking at an opportunity to buy the Greenback at lower levels?
We’re zooming in on the 4-hour chart to check out a range setup:
U.S. Dollar Index (DXY) 4-hour Forex Chart by TV
In case you missed it, the U.S. dollar had a strong start to the week as rising U.S. bond yields and speculations of sticky high inflation (and higher for longer Fed interest rates) under a Trump presidency pushed the U.S. dollar higher.
The Greenback has given up some of its gains, however, thanks in part to uncertainty ahead of the U.S. elections and a surprisingly weak advance Q3 GDP report.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The U.S. Dollar Index (DXY) recently retested Friday’s lows near 104.00, but also found buying pressure around the psychological area.
Watch out for more green candlesticks above 104.00, which is near the Pivot Point line (104.10) and range support area in the 4-hour chart. Further gains could bump DXY up to the 104.30 mid-range levels if not the 104.60 previous high and range resistance zone.
But what if U.S. dollar bears are just taking a breather?
If DXY makes new weekly lows and consistently trades below the range support, then we could see increased odds of a longer-term bearish reversal for the Greenback.
Look out for sustained trading below 104.00, which may drag DXY to the 103.60 S1 levels or 103.50 area of interest near the 100 SMA.
Good luck and good trading this setup!