The US Dollar is for the most part the global standard when it comes to currency. Used as a reserve currency by many importers and exporters globally, as well as the many central banks across the globe, it’s no surprise really why so many people use it. Many have talked about the downfall of the U.S dollar and for good reason, given the recent fall in the Dollar Index itself. But I, like many others, believe that people have jumped the gun a little too quickly if they think the U.S. dollar is going to stay down.
The US dollar is a source of pride for most Americans, but on the charts it remains quite down when we observe the dollar index. A descending triangle with a solid floor was certainly the theme at hand, when it came to the technical aspect. Generally with a descending triangle we expect movements to go even lower eventually, however in this case markets pushed the US dollar up further.
This has happened in part because of the euro. I say this not because the euro has been starting to falter against the USD, but because of the way that the dollar index is currently made up when you look at weightings.
Any movement lower in the euro generally has quite a large effect on the Dollar Index, and markets are aware of this. But with the recent troubles at home for the Euro-zone, it looks likely that we may see the Dollar Index climb even higher.
This is in part to deflation threats at home, and the ECB’s eye on the currency – which it sees as currently too high. Markets are expecting further stimulus, or even negative interest rates in an effort to combat the troublesome currency, which has so far broken through its 1.37 price level.
Any current targets to enter in the DX should be aiming for the 80.602 level; just above the resistance level there. Aiming for targets higher it is imperative to focus on the major points of resistance in the current market. The 81.380 and 82.656 are all relevant targets which traders should look to focus on when aiming to exit.
Current stoch and RSI are showing strong buying signals, but this will need to break through the current 23.6 fib level that is in play in order for any bullish signals to be fired. As the present market is still struggling to push through the barrier – even after breaking out of the descending triangle that was in play.
Overall, the DX is a good play by any textbook, but there are still things to watch; especially the 23.6 fib level which is currently helping to hold back any further movements. Any push out of here would signal conditions for trending higher and in my books would look bullish.