The dollar is strengthening across the currency market, while its main competitors, the euro, yen, and pound, are weakening against it, also pushing the DXY dollar index towards the next "round" resistance level of 107.00.
At the same time, the media reports disagreements in the U.S. Congress regarding the approval of the budget for the next fiscal year and the possibility of a government shutdown, which also increases demand for the safe-haven dollar.
Thus, the willingness of Federal Reserve leaders "to further raise rates if necessary" has been perceived by dollar buyers as a signal to increase long positions, and positive macroeconomic indicators of the U.S. economy allow the Fed to do so, enabling the dollar to continue its rise.
From a technical perspective, the DXY index (CFD #USDX in the MT4 terminal) is trading in a zone of strong bullish sentiment, medium-term—above the key level of 103.50 (200 EMA on the daily chart), long-term—above the key support levels of 101.20 (144 EMA on the weekly chart) and 100.00 (200 EMA on the weekly chart).
In this situation, long positions remain preferable. The first, the "fastest" signal for new purchases here could be a break above the local resistance level and today's high at 106.46.
In an alternative scenario, a break below the key support level of 103.50 will return the DXY to the medium-term bearish market zone.
The first signal to implement this scenario and open short positions could be a break below the local support level and today's low at 106.14, and the important short-term support level at 106.02 (200 EMA on the 15-minute chart).
A break of the key support level of 100.00 in case of further decline in the DXY will create conditions for it to enter the long-term bearish market zone.
Support levels: 106.14, 106.00, 105.84, 105.50, 105.00, 104.65, 104.40, 104.00, 103.50, 103.00, 102.00, 101.20, 100.00
Resistance levels: 106.46, 107.00, 107.80, 108.00, 109.00, 109.25
