The medium-term picture at the moment in the FXCM US Dollar Index (equally weighted basket of USD versus EUR, JPY, GBP and AUD) couldn’t be less clear. There is some risk that a broader topping pattern is tracing out, but it would take a move under the May lows (and 200-day moving average) around 11,600 to confirm such a negative shift. There is also plenty of risk that the correction against the primary uptrend has already run its course and USD is set to head higher again, but traction above the June high (and 78.6% retracement of the April-May decline) is desperately needed to confirm such a resumption. In the near-term with the index content to hover around the 50-day moving average (currently 11,850) and the 11,900 50% retracement of the April - May decline there is little to do but wait and let things play out. The spike high from Monday at 11,922 and the mid-June low near 11,730 are more immediate pivots.
- Still short EUR/USD. Strength over 1.1275 forces a re-think.