The U.S. Dollar Sits Precariously at Support
The U.S. Dollar Index is sitting with this legs dangling over the cliff. The cliff can be identified by a bear flag on the daily chart, the 81.20 and 81.00 minor and major psychological levels and – fundamentally – traders waiting on what Ben Bernanke and Mario Draghi have to say Friday and Saturday in Jackson Hole. A clearer picture of stimulus and optimism from Draghi will push the greenback off the cliff.
The wait and see for this weekend’s expected fireworks has left the U.S. Dollar Index fairly rangebound in the near-term with a bigger picture bearishness slightly more longer-term. This means that while the dollar takes a breather, the dominant trend – however fresh it is – is down.
Another level that needs to be mentioned and deserves special attention is the 200DMA (daily moving average). The 200 period simple moving average on the daily time frame has a special place in analysis; it’s obviously a key technical level but it is so well watched by so many different types of traders that it takes on a psychology relevance, in this case, as support.
The daily U.S. Dollar Index is sitting at a key level important enough that all forex traders managing or looking to enter any trade against the greenback should pay attention. Of course it’s also a market that will reflect the expectation of stimulus, Fed action, and euro-optimism.
As an active forex trader and Chief Currency Analyst for InterbankFX.com I do write for a number of sites all over the web and I am happy to say that I will be posting updates at www.IBFXconnect.com. My Activity Board will feature the trades from my trading account as well as intraday commentary.
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