The dollar index opened in red today as investors are consistently watching and giving prior importance to controlling inflation. Hike in inflation led major central banks to increase the rate of interest. FED revised interest rates twice in the last two meetings. Moreover, earlier they raise 0.50 BPS but in their last meeting, they raise 0.75 BPS which makes a total now 1.75 BPS. For the US, quite a high-interest rate. Since 1994, the biggest hike in interest rate took place to curb the inflationary period.
Furthermore, interest rates are still very little with such a high unemployment rate and inflation. The economic health of the United States is getting worse and we are hoping to sustain thereby heading our economy towards growth.
Let’s move further and do some technical analysis
Dollar Index
Above is the weekly chart of the Dollar Index which is forming a double-top pattern. For now, the pattern is still not completed but we may clearly observe that the dollar index is trading at its resistance level.
If the dollar index reaches below 104 level on a closing basis, then we may see further downside targets of 102.50—101.50 levels.
 The level of 101.50 would be treated as neckline support and if that support level breaches on a weekly closing basis then a new downside panic would generate.
Furthermore, a weekly close below 101.50 levels may lead the dollar index to head more down and we may downside target of 96 levels. Traders are advised to maintain a stop loss above 105.50 levels.
XAU/XAG
Above is the weekly chart of XAU/XAG which is forming a double top or rectangle pattern. For now, neither the pattern is completely formed nor the breakout is given but still we are expecting a bounce back.
Moreover, silver may outperform in the short –term and may end the bearish zone if it closes below 83.50 levels.
Furthermore, if a level of 83.50 breaches then we may see a downside target of 80—78 levels. Traders are advised to maintain a stop loss above 86 levels.
For a long time, gold was stuck in the middle of interest rates and inflation. But now things seem normal because no significant events are witnessed till another FED meet. Hopefully, look as if gold got some relaxation and may end the bearish mode soon.
Silver looks more positive than gold. Don’t jump to sell silver at lower levels.
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