It’s worth remembering market correction definition

Dollar is weak. There is hardly be any doubt about that. We along with many others expected this for some time now. Reason is quite simple, Dollar rose riding on hawkish bias of U.S. central bank and divergent central bank policies with FED. But that divergence is reaching limit points for global central bank and FED isn’t as hawkish as market had expected, while pushing up the Dollar.

So, it is now wonder that Dollar index is down for seventh consecutive day and more than 6.5% so far this year.

But the question, everyone is looking for is – how far Dollar will slide?

In this context, definition of a correction is worth noting correction definition, which says any security will be said to be in correction, if it slides 10% at least.

Last year, Dollar index topped at 100.5 and 10% correction would see the index at around 90.46 level but the momentum could push it beyond 90 level. We will recommend watching 88-89 area closely for buying to resume.

Why talk about Dollar buying?

Well FED has been slower than expected in its hike but it is the only developed market central bank to be firmly in path of a hike with much better economy than others.

Moreover, if Dollar reaches 90.5 area, it is the first time Dollar index has corrected, since its run began in summer of 2014.

Dollar index is currently trading at 92.1, which means there are still juice left for Euro, Pound, Yen and Franc.

In a separate note, 50% Fibonacci retracement is coinciding at 89.6 area.

Chart created in Tradingview.com