Dollar climbs higher on a more cautious Fed rate cut outlook

The dollar continues its strong bullish rally for the third straight day, fueled by expectations that a Trump victory in the U.S. presidential election would bolster the economy and ease pressure on the Federal Reserve. Additionally, diminished expectations for aggressive rate cuts in the coming months have provided further support for the U.S. currency.

On Wednesday, the dollar index, which measures the dollar’s performance against a basket of major currencies, broke above the 104.00 barrier, reaching an eleven-week high.

Bulls are targeting levels at 104.38/54 (the 76.4% Fibonacci retracement of the 105.78/99.84 decline and the July 30 lower top). A break above these levels would pave the way towards 105.78, the June 28 peak.

However, negative signals are emerging on the daily chart, with bullish momentum fading and the RSI in overbought territory. This suggests that the bullish run may lose steam in the coming sessions, leading to a potential pause for consolidation.

The overall bullish structure on the daily chart (with multiple moving average bull-crosses and strong positive momentum) indicates that the broader uptrend remains intact. Any corrective pullback is expected to be limited.

The broken 200-day moving average and the 61.8% Fibonacci retracement level (103.57/51) should provide strong support, preventing a deeper decline toward the 103.00/102.80 area.

Res: 104.38; 104.54; 105.00; 105.47
Sup: 103.90; 103.57; 103.33; 103.00