Dollar index retraces 23.6% of Trump Bump

The dollar index fell to near 100.60 (23.6% of 95.89-102.05) as the losses in the oil prices led to a correction in the risk assets.

Is this a technical correction or the beginning of a major sell-off?

The US dollar was poised for a technical correction following a sharp near 90 degree rise over the last two weeks on heightened expectations of a steeper Fed rate hike path.

Consequently, the oil drop today became a reason for the much awaited technical correction.

However, if the oil drop worsens, the markets may begin questioning the possibility of the rate hike next year or even December, in which case the correction in the US dollar index could take an ugly turn.

Dollar Index Technical Levels

The index was last seen trading around 100.85 levels. A breakdown of support at 100.60 (23.6% of 95.89-102.05) could yield a much deeper retracement of 100.00 (zero figure) and 99.70 (38.2% fib). On the other higher side, a move back above 101.03 (10-DMA) would expose the 5-DMA level of 101.34 and 102.05 (Thursday’s high).