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USD Index Outlook: Dollar Consolidates Above New 2 1/2 Year Low Before Bears Resume

Bears are taking a breather above new 2 1/2 year low on Friday, as traders collected some profits on 1% weekly fall.

The dollar index broke through psychological 90 support, generating bearish signal for extension towards key med-term support at 88.14 (Feb 2018 low, reinforced by 50% retracement of 72.69/103.80, 2011/2020 advance), with weekly close below 90 level to confirm signal.

Technical studies on larger timeframes (D/W/M) are in firm bearish setup and supportive for further weakness.

The dollar remains under pressure on rising risk appetite on global hopes for vaccine success and acceleration in economic recovery, while Brexit uncertainty and lack of agreement on new US stimulus package add to downside pressure.

Limited bounce, ideally to be capped by falling 10DMA (90.50) and extended upticks to remain below descending 20DMA (91.04) is likely to precede fresh push lower.

Res: 90.00, 90.13, 90.50, 91.04
Sup: 89.76, 89.60, 89.00, 88.50