The Dollar Index remains in the red as markets await Powell’s speech

The dollar index turned red on Monday after initially opening higher due to market reactions to the assassination attempt on former President Donald Trump. However, dollar-negative sentiment prevailed during the European and early US sessions due to growing expectations for a September Fed rate cut.

Bears are pressuring support levels at 103.69/61 (last Friday’s low / June 7 low), and the index is on track for a second consecutive daily close below the pivotal Fibonacci support at 103.82 (61.8% retracement of the 102.26/106.36 ascent), which would reinforce the bearish signal.

A firm break below the 103.69/61 pivots could risk an acceleration towards 103.22/00 (76.4% Fibonacci retracement / psychological level).

The technical picture on the daily chart is firmly bearish, with strong negative momentum and multiple moving average bear-crosses (the latest being an attempt to form a 5/200DMA death-cross), adding to the bearish near-term outlook.

However, Fed Chair Powell’s speech later today is also in focus, as comments regarding the central bank’s next steps in monetary policy are expected to have a strong impact on the dollar.

A dovish stance will reinforce expectations for a rate cut and push the dollar further down, while hawkish comments could disrupt the larger bearish trend and give the currency a fresh boost. A lift above the 200DMA (104.22) and a break of the daily cloud base (104.49) are seen as minimum requirements to revive bullish sentiment.

Res: 104.00; 104.22; 104.49; 104.74
Sup: 103.61; 103.22; 103.00; 102.80