Risk Aversion Boosts the Dollar

The dollar index extended its recovery for the second consecutive day, bouncing strongly from a new four-month low of 103.31 on Thursday. This surge was driven by fresh risk aversion following a global cyber outage that impacted financial centers, banks, airlines, and other sectors, pushing investors towards safer assets.

Technically, the daily chart remains bearish. The 14-day momentum is still deeply negative, and the moving averages are in a bearish configuration, indicating that the recovery might struggle to sustain its gains.

Bulls are facing resistance as they approach the declining 10-day moving average (104.12), which recently formed a death cross with the 200-day moving average (104.18). This area also guards the pivotal Fibonacci barrier at 104.26 (38.2% retracement of the 105.78 to 103.31 bear-leg). A sustained break through this zone is needed to improve the near-term outlook for further recovery.

If the index fails to break this resistance, the downside remains vulnerable, with any limited recovery offering better levels to re-enter the larger downtrend.

Resistance Levels: 104.18; 104.26; 104.55; 104.67
Support Levels: 103.85; 103.67; 103.31; 103.00