In European trading on Tuesday (September 13), the US dollar index fell from a high level and is currently trading around 108. As of 16:02 Beijing time, the US dollar index was quoted at 108.02, a decrease of 0.27%. The lowest price of the US dollar index exchange rate on the previous trading day was 107.81. It closed at 108.32.
Economists expect the year-on-year increase in the U.S. CPI to fall to 8.1% in August from 8.5% in July. While muted inflation data may have traders paring bets on rate hikes, that may not signal a peak for the dollar, given the greenback’s safe-haven appeal and the Fed’s hawkish stance.
The U.S. dollar index has fallen for five straight days as of Monday, hovering just above 108. The U.S. dollar index hit an inflection point last week and is likely to be pulling back, according to a continuous indicator compiled by technical analyst Tom DeMark. Offsetting a stronger dollar is fraught with risks, as the Fed could still raise interest rates faster than other central banks if necessary.
“We need external risks to become more manageable, or stronger opposition from non-U.S. officials, or the Fed to accept a higher inflation target to really see a top in the dollar,” she said.
US Dollar Index Technical Analysis
The U.S. dollar index faded away after fulfilling its upside forecast near the September 2001 low of 111. Economists at Societe Generale expect the dollar index to continue falling below 106. Initial resistance is at 109.30.
106, the lower boundary of the ascending channel since February, is near-term support. The daily RSI is also near the lower end of its bullish zone, which suggests that 106 could be an important level. Only if the index fails to defend this support will a further pullback to August lows of 104.60/103.80 be possible.