The US dollar index gained strength on Friday after trading stable around 90 all through the week. The index rose in the US session on Friday and has closed at 90.51, up 0.38 per cent for the week. The euro falling sharply from 1.2193 to a low of 1.2093 on Friday aided the dollar index to rise.
The rise in the dollar index was in line with our expectation. Last week, we had said that as long as the index sustains above 89.50 a rise to 91-91.50 is possible within the overall downtrend. This view remains intact with immediate support now at 90. The chances of this rise extending even up to 92 cannot be ruled out. However, the broader trend is still down. As such, we can expect the dollar index to reverse lower again from the 91.50-92 region and keep the overall downtrend intact.
The US Federal Reserve’s monetary policy outcome is due on Wednesday. Earlier last week the European Central Bank (ECB) kept the rates unchanged at 0 per cent. The…