Dollar Index Surges to Five-Month Peak Amidst Robust US Data, Sparking Rate Cut Speculation

The dollar’s upward momentum persisted for the fifth consecutive day, reaching a new five-month high early on Tuesday against major currencies.

The latest US economic data revealed a stronger-than-expected increase in retail sales, further affirming the robustness of the US economy. This positive trend follows recent strong labor data, reinforcing the notion of a healthy economic landscape.

The promising numbers also suggest that the Federal Reserve may delay implementing interest rate cuts, which in turn supports the dollar.

On Tuesday, the dollar’s gains breached a significant level at 106.11, as indicated by the weekly Ichimoku cloud top. However, bullish investors may encounter obstacles ahead due to overbought conditions in daily studies.

While downward movements are anticipated, they are likely to be limited, with solid support expected around the 105.00 zone. This level represents the broken Fibonacci 38.2% of the range from 114.72 to 99.20, along with the rising daily Tenkan-sen line, serving to bolster bullish sentiment. Investors remain poised for potential advances towards the weekly cloud top, aiming to breach the next substantial barrier at the 107.00 zone, characterized by the October lower platform and the 50% retracement level.

Res: 106.22; 107.00; 107.88; 108.62

Sup: 105.61; 105.13; 104.92; 104.24