FX.co ★ Dollar is sinking deeper into negative territory

Dollar underwent a massive drop on Monday after Treasury yields declined on the news that the Fed will not change its soft monetary policy any time soon. This is rather surprising because consumer prices already surged, but it seems that the Fed is still not content with the current level of inflation.

Aside from that, the rise in CPI is caused by the 23% increase in gas prices. It also contrasts the actual situation in the country, which means that the indicator does not reflect the current conditions of the economy.

Hence, the USD index went below the rising wedge, losing 5% in almost all other world currencies.

And although the dollar is still higher than its price at the end of last year, bullish traders behaved cautiously, giving way to sellers. Such resulted in the large-scale decline in the market.

But there is still a chance that the trend will go back upwards, as long as the quote does not drop below January lows. If 89.40 is broken, then the trend will truly become bearish.

In any case, the dollar will still be able to win back losses in the short term provided that the quote breaks above the resistance levels.

Its overall outlook, however, is negative, as it could sink deeper into negative territory. The key level for this is 91.00.

If the dollar continues to undergo strong pressure, the price will collapse to 90.00, or to 89.40.