Dollar Index – bulls lose momentum but maintain control as markets anticipate the release of U.S. labor data

The dollar index pulled back from a new two-week high on Monday, following a strong three-day recovery rally that began showing signs of fatigue.

The repeated failure to break above the 101.72 barrier (50% retracement of the 103.06 to 100.38 decline and the top of the 4-hour cloud) and an overbought stochastic indicator led to some partial profit-taking. However, the dips have been shallow so far, indicating that bulls still maintain control.

The dollar was supported by last week’s inflation data, which eased expectations for more aggressive action by the Fed, reinforcing the widely anticipated 25 basis point rate cut.

The pause in the rally also coincides with the days leading up to a key economic event this week—the release of the U.S. labor market report, with particular attention on Non-Farm Payrolls (NFP).

This final set of economic data before September’s policy meeting will complete the picture and influence the scale of the Federal Reserve’s next move.

A stronger bearish signal would emerge with a break and close below the broken Fibonacci support at 101.40 (38.2% retracement), with further declines below the 10DMA (101.07) confirming a reversal.

Conversely, a sustained break above the pivots at 101.72/85 (50% retracement/20DMA) could pave the way for gains beyond 102.

Res: 101.72; 101.85; 102.03; 102.43
Sup: 101.40; 101.07; 100.78; 100.38