Dollar's Uptrend Attempt Fails to Boost Risk Assets
The U.S. dollar is attempting to reclaim its 2026 uptrend, but market sentiment remains broadly cautious. The Fear & Greed Index suggests that investors are still fearful, which could be a sign of a short-term reversal in currency markets and equity indices.
The pullback in crude oil prices has eased inflationary pressure, supporting a more resilient outlook for U.S. markets ahead of the midterm elections. However, elevated Treasury yields and a strengthening dollar continue to limit market gains.
On the technical front, EUR/USD is approaching its yearly lows near 1.1400, which also aligns with the 78.6% Fibonacci retracement of the June-August advance. A breakdown below this area would expose the yearly low near 1.1320, while a sustained move below that support would increase the risk of a deeper decline toward 1.1100.
The Nasdaq is also showing stretched overbought momentum on both daily and hourly time frames, increasing the risk of a short-term pullback. A close above the record high near 30,750 would extend the bullish move toward 31,200, but this area could attract profit-taking given the overbought conditions.