The current week is characterized by an increase in aversion to more risky assets. The stock markets are dominated by drops, and the lower demand for risk translates into greater interest in bonds. Dow Jones Index fell by more than 6.0% at the time, ranking the largest drop in its history. The SP500 fell sharply in the second session in a row, losing more than 4.0%. Such falls on Wall Street have not been seen for two years. Extremely overvalued stocks are quickly cheaper, so this situation allowed for further rebound in the US currency. After a positive surprise in the form of a report from the US labor market, yesterday the US Dollar got an impulse to strengthen in the form of activity indicator readings in the US services sector. The ISM index for services increased in January to 59.9 points. from 56 points after adjusting the data for December, the highest level since August 2005. Yesterday, Mario Draghi stressed the power of economic expansion in the Eurozone, while the tone of today's speech of James Bullard from the Fed should be in line with expectations for continued normalization of monetary policy in the US.
Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market has managed to break out above the technical resistance at the level of 89.62 and now is heading higher towards the level of 90.11. Only a sustained breakout above this level would change the short-term outlook from bearish to more bullish.
