Currency Outlook: Dollar Retains Momentum

The dollar index has shown strong momentum, recording a rally for the fourth consecutive week. This uninterrupted uptrend has seen the index rise above the significant resistance level of 104, closing the week at 104.25, marking an increase of 0.74 percent. The primary driving force behind this resurgence is the notable rise in US Treasury yields, which has bolstered the strength of the greenback. Additionally, market participants have adopted a cautious stance leading up to the upcoming US Presidential Election next month, providing further safe-haven support for the dollar.

Uptrend Remains Solid

The dollar index's uptrend remains robust, currently sitting at 104.25. Immediate support can be found at the 104 level, with the next strong support level at 103. Any potential decline below 104 is expected to be limited, as fresh buying interest likely emerges in the market.

There is potential for the dollar index to rise to 105. A breakout above this level could push the index further up to 106. However, it is essential to monitor price action closely afterward, as a strong trigger will be necessary to sustain a rise above 106. If a reversal occurs at that point, the index might retreat back to the 104-103 range. The outcome of the US Presidential Election will be a critical factor in determining this.

In the immediate term, expectations are for the dollar index to move toward 106 over the next few weeks before potentially pulling back after the elections.

Further Gains Anticipated

The US 10-Year Treasury yield has effectively broken above the previous resistance of 4.12 percent, closing well over the pivotal level of 4.2 percent. This development signals a positive outlook for the yield. The current robust support is established in the 4.2-4.17 percent range. In the coming weeks, the US 10-Year Treasury yield may rise to between 4.4 and 4.45 percent.

It will be crucial to keep an eye on price movements following this increase, as a decline is expected once again from the 4.4-4.45 percent resistance zone.

Critical Support Levels

The euro has recently dropped, moving below the key support level of 1.08, reaching a low of 1.0761 before experiencing a slight rebound. The crucial support at 1.0750 is currently holding, which preserves the possibility of a corrective bounce to the region of 1.09-1.0950 in the near term. However, the broader trend for the euro remains downward. A rise beyond the 1.0950 mark will likely be challenging.

Consequently, there is an expectation for the euro to witness a new decline from the vicinity of 1.09-1.0950 down to the levels around 1.07-1.06 as we move forward.

Indian Rupee Stagnation

In contrast, the Indian rupee has remained stagnant, trading within a narrow range of 84.05-84.08 throughout the week. The projected trading range for the rupee continues to be between 84 and 84.10, and it may remain confined within this spectrum for a while longer.

The bias for the rupee appears negative, leading to an expectation that it may break 84.10 and potentially decline to 84.40 in the coming weeks. A breach below 84 is necessary for the rupee to initiate a recovery toward the thresholds of 83.90-83.80.

Overall, the dollar index is experiencing a strong uptrend with prospects for further gains ahead.

dollar, yields, election