The dollar Index extends its intense rebound near the 94.00 threshold, clinching a new high for this year 2021 amid an earlier rate hike expectation and announcement of a nearing tapering asset purchase which clearly impacted the yield curves.

 

A tightening of monetary policy by the European Central Bank remains far in the future but ECB remains vigilant on its inflation figures yet to be released this Friday. This could give additional upward momentum on the USD in the near term and exerts additional selling pressure on the euro and the pound.

 

On the technical side, after a breach and close above the 100% retracement A-B-C (93.72 level) ,the greenback could easily approach the 113% level at 94.38 followed by 127% level – 94.98 level in the near term. Resistance at 96.47 (161.8%) remains key level to watch.

 

On the other side, 1.3750 marked the completion of ‘wave e’ of the triangular retracement (wave B) of corrective move A-B-C  and abruptly, we saw fresh sellers entering the market below the 1.3600 levels yesterday.

 

As per Elliott wave principle, GBPUSD is battling around 1.3515 levels and higher inflation, Brexit and Petroleum concerns could exert further pressure on the pound towards 1.32 levels towards completion of wave C.

 

A breach and close above 1.3750 nullify this downward pattern.

 

DOLLAR INDEX – Daily chart

 

GBPUSD – 240 mins

 

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