The US Dollar Index initially rallied during the course of the week but found so much in the way of resistance at the 98 handle that we formed a shooting
The US Dollar Index initially rallied during the course of the week but found so much in the way of resistance at the 98 handle that we formed a shooting star. This of course is a very negative sign and it now appears that we could be trying to form a descending triangle again. With this, that’s a longer-term bearish candlestick formation, so on a break down below the bottom the shooting star we feel that the market will test the 96.50 level, and then the 94 level over the longer term. On the other hand, if we break above the 98 handle, we feel that the market will continue to go much higher, perhaps reaching towards 101st, and then eventually the 102 level.
Keep in mind that the Federal Reserve has step away from interest-rate hikes recently, and that of course is going to be bearish for the US dollar. However, they did state that one of the biggest drivers of them away from that position is the rest of the world. If that’s the case, then a lot of people will be concerned about economic growth in other places, thereby driving money into the US dollar. It’s quite confusing situation as the Federal Reserve has not lived up to its promise of becoming a transparent central bank, and it now appears that the Federal Reserve is just as confused as everybody else. Quite frankly, it’s almost a bit like the “inmates are running the asylum”, as traders tend to make decisions for the Federal Reserve overall. At this point in time, it looks as if the US dollar is starting to see significant downward pressure, but not necessarily in an aggressive manner. Keep in mind that this contract is highly sensitive to the EUR/USD pair, and runs contradictory to it.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.