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The US Dollar Index plummeted on Tuesday, December 13, breaking below a major support following a softer-than-expected inflation report for November. This led to investors scaling back expectations for future Federal Reserve rate increases.
Since the initial drop after announcement was released, the price of the Dollar Index has recovered almost 80%. Although this could simply be the pullback phase of a longer-term downtrend.
A downtrend is an overall decrease in price, created by lower lows and lower highs which can clearly be seen on the daily time frame, marked out in the chart below.
This week’s CPI reading, combined with the technical analysis of the dollar index, suggests that the USD Index may continue to decline, with the next major support sitting around $102.25. The dollar index is currently retracing and testing a resistance zone between $104.40 and $104.90.
Disclaimer: Articles are from GO Markets analysts and contributors and are based on their independent analysis or personal experiences. Views, opinions or trading styles expressed are their own, and should not be taken as either representative of or shared by GO Markets. Advice, if any, is of a ‘general’ nature and not based on your personal objectives, financial situation or needs. Consider how appropriate the advice, if any, is to your objectives, financial situation and needs, before acting on the advice. If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.
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