The dollar index could close the week above 104.00 level

The low value of the dollar index this week was on Tuesday at the 103.60 level. 

Dollar index chart analysis

The low value of the dollar index this week was on Tuesday at the 103.60 level. After that, the dollar starts a bullish rally to 104.24, forming a weekly high there. We fail to move above, which pushes the index down and triggers a bearish consolidation to 103.65 levels. A new lower low was not formed, indicating that we could see a new war in the dollar index.

That happened because with two strong impulses on Thursday, the dollar returned above 104.00 and the EMA200 moving average. During the previous Asian session, the dollar was maintained above the 104.00 level but failed to break above the 104.20 level. We need a stronger impulse that would move us up and form a new weekly high. Potential higher targets are 104.30 and 104.40 levels.

Does the dollar have the strength to stay above 104.00 and initiate a bullish recovery?

If a fall occurs below the EMA200 and the 104.00 dollar level, the index would be under greater pressure to start a deeper retreat. By dropping to the 103.80 level, we start a bearish consolidation and observe what is happening at the 103.70 level. Potential lower targets are 103.60 and 103.50 levels.

This morning in the EU session, we had news about Inflation in the Eurozone. The data showed a decrease in inflation in February from 2.8% to 2.6% compared to the previous month. The result is still higher than the forecast, which was 2.5%, and it keeps the euro from falling and puts a certain amount of pressure on the dollar. We have the US Manufacturing PMI and The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) in the US session. The data of these two news items could increase the market’s volatility and thus cause greater movements in the graph of the dollar index.

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