The US Dollar Index (DXY) shows moderate losses on Wednesday but has retraced most of the decline seen during the Asian trading session.
The DXY, which measures the value of the Greenback against a basket of six peers, remains steady above 101.00, consolidating gains after a 0.7% rally in the last four days
The Greenback is drawing support from rising demand for safe havens, as the Middle East conflict escalates and Oil prices rally, bringing the global economy to the brink of recession. US military attacked Iran for the 11th consecutive day, and Reuters reported that three Saudi vessels turned around in the Red Sea, adding to evidence that the Houthis have blocked another key corridor for Gulf Oil supply. Technical Analysis: Potential Bullish Flag formation Dollar Index Spot trades at 101.17, holding above the top of the downtrend channel from late June highs, and highlighting a potential Bullish Flag formation.
Momentum indicators back the constructive scenario, as the 4-hour Relative Strength Index (14) advances beyond 60, and the Moving Average Convergence Divergence (MACD) stays in positive territory. The pair remains capped a few pips below the July 8 and 15 highs in the 101.30 area, which, so far, are closing the path towards the year-to-date high, in the 101.75 area. The Bullish Flag’s measured target is at the 102.50 area, which caps further gains for now.