Aug 10 (Reuters) – The dollar index weakened on Thursday after PPI and jobless claims data and remained at risk of further losses even though it survived a test of its post-CPI low at 104.63 by the 23.6% Fibo of the 2021-22 uptrend at 104.55.
Rebounding Treasury yields trimmed the dollar’s losses, but it remained below this year’s uptrend line and pivotal 50-day moving average.
Though longer-term Treasury yields have rebounded amid unwinding of previous curve flattening and inversion flows, perhaps skewed by today’s 30-year Treasury auction, the July CPI and PPI reports lend support to the view U.S. inflation may be peaking, which may diminish expectations for dollar-supportive Fed rate hikes.
The dollar’s enormous 22.5% rally off the pandemic lows to its highest in 20-years left it extremely overbought and it hit a thicket of long-term technical resistance before Wednesday’s first close below this year’s uptrend line and 50-day moving average, last at 105.59, and at risk of a broader retracement.
A close below 104.55, the 23.6% Fibo of 2021-22’s advance, would target supports by the 100-DMA that’s rising toward the 38.2% Fibo of this year’s rise at 103.69, close to the post-June Fed hike lows.
(Randolph Donney is a Reuters market analyst. The views expressed are his own.)