Dollar's bearish cycle seems far from over
Sept 20 (Reuters) -The U.S. dollar's bearish cycle seems to be far from over after the Federal Reserve's half-point rate cut; the daily chart suggests falls are inevitable at some point.
The dollar slipped in choppy trading as markets grappled with Wednesday's supersized 50 basis point cut, as well as the U.S. central bank's switch to an easing monetary policy stance.
The USD index =USD, which tracks the dollar against a basket of six major currencies, looks set to probe the psychological level of 100. A sustained break under 100 would likely trigger bigger losses. Fourteen-day momentum turned negative at Tuesday's close, highlighting the underlying bearish structure.
The downside risk will remain while the index is capped by major 101.697 Fibo, a 23.6% retrace of the 106.51-100.21 (April-September) drop. A break and daily close above the 101.697 Fibo, however, would shift the bias back to the upside.
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Martin Miller is a Reuters market analyst. The views expressed are his own; Editing by Kevin Liffey
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