USDInd hits 3-month low. More room to fall?

<p><strong>By <a href="http://investmacro.com/contributors/contributor-profile-forextime/">ForexTime</a></strong></p>
<ul>
<li>Dollar weakened as markets raise bet on Fed rate cuts in 2024</li>
<li>USDInd approaches key support levels around 103 region</li>
<li>Daily close below 103 region could spark another 1,300-point drop</li>
<li>Other technical indicators suggest 350-point rebound ahead</li>
<li>FOMC meeting minutes later today may spark more volatility</li>
</ul>
<p>&nbsp;</p>
<h3><strong>The USD index has fallen by some 4000 points since its November 1st intraday high. </strong></h3>
<p>There may be little ahead to cheer for the index, given current market expectations that the <strong>US Federal Reserve may start to cut interest rates as early as May 2024.</strong></p>
<p><em>Recall that greater expectations for lower interest rate cuts tend to translate into a weaker currency.</em></p>
<p>&nbsp;</p>
<p>At the time of writing the US Index is approaching a convergence of <strong>support levels:</strong></p>
<ul>
<li><strong>103.000: </strong>an important round number level</li>
<li><strong>102.910:</strong> the 261.8 Fibonacci level</li>
</ul>
<p><em>The Fibonacci levels are taken from the 29th September low to the 3rd October high.</em></p>
<blockquote>
<h3><strong><em><span lang="EN-US" xml:lang="EN-US">A daily close below these levels could see the index fall further to 101.900 to trade around its lowest since August.</span></em></strong></h3>
</blockquote>
<p><img fetchpriority="high" decoding="async" class=" lazyloaded" src="https://www.forextime.com/s3-static/users/user16/USDIndDailyIMP%201.png" alt="" width="1000" height="800" data-entity-type="file" data-entity-uuid="4e205bb9-806b-4bdc-99c7-985cea1012fd" data-src="/s3-static/users/user16/USDIndDailyIMP%201.png" /></p>
<h3></h3>
<h3><strong>USDInd may see 350-point technical rebound soon</strong></h3>
<p>From an <strong>Elliot wave perspective</strong>, the USDInd D1 is in its 5th impulse wave of the decline from 107.914 posted on November 1st.</p>
<p>Based on the Elliot wave theory, wave 5 is usually followed by a <strong>correction </strong>with sequence A-B-C coming in different forms.</p>
<blockquote>
<h3><strong><em>If the key support levels around 103.00 hold, we may see the index bulls come in for a counter trend move back up to its 200-day moving average.</em></strong></h3>
</blockquote>
<p>&nbsp;</p>
<p>Note also that the <strong>Relative Strength Index</strong> (an indicator that shows us extreme buy and sell zones) is teetering at the 30-point level.</p>
<p>If the RSI falls below 30,  it becomes technically oversold.</p>
<blockquote>
<h3><strong><em>Such a technical event would increase the probabilities of a rebound.</em></strong></h3>
</blockquote>
<p>&nbsp;</p>
<p>However, the <strong>Average Directional Movement Index</strong> (an indicator that shows us the strength of the trend) is pointing upwards.</p>
<blockquote>
<h3><strong><em>This means that the downward bias for the USDInd remains strong.</em></strong></h3>
</blockquote>
<p>This could spell an extended decline in the USDIndex, until we see a peak in the ADX signaling weakness in the current bearish strength.</p>
<p>&nbsp;</p>
<h3><strong>What could move USDInd today?</strong></h3>
<p>With <strong>FOMC meeting minutes</strong> due at 7:00 pm GMT tonight, traders and investors around the world are looking for confirmation that peak US interest rates is truly here.</p>
<p>In other words, markets want to know whether the Fed is truly done with its rate hikes for this cycle.</p>
<blockquote>
<h3><strong><em>If so, that could send the USDInd to a fresh 3-month low.</em></strong></h3>
</blockquote>
<p>&nbsp;</p>
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