Talking Points
- USD reverses from key cycle turn window
- Key resistance awaits at 10,600
Last week we wrote a couple of notes on the potential for a low to be seen around 10,500 in the FXCM Dollar Index (read them here and here). The Index is an equally weighted basket of the US Dollar against the EUR, Pound, Yen & Australian Dollar and gives a good snapshot of the how the Greenback is faring generally. Strength in the Index has begun to materialize over the past few days and a close over the median line we mentioned last week now at 10,540 will be initial evidence of bottom in the USD. The next more widely watched technical level will likely come into play around the March-20 high at 10,600. Traction above here will confirm further that a bottom is in place and set the stage for a more important USD move higher in the weeks ahead. Only weakness below 10,495 would completely undermine the burgeoning positive cyclicality in the Index and re-focus lower.
Charts Created using Marketscope – Prepared by Kristian Kerr
LEVELS TO WATCH
- Resistance: 10,560 (Fibonacci), 10,600 (March 20 high)
- Support: 10,540 (Median line), 10,495 (March low)
Strategy: Buy FXCM US Dollar Index
- Entry: Buy FXCM US Dollar Index at 10,540
- Stop: 1-day close below 10,495
- Target: 10,650
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com.