US Dollar Index Forecast December 27, 2012, Technical Analysis

The US Dollar Index fell initially during the session, but managed to bounce back by the end of the day on Wednesday. We have essentially a flat day though, so we can only look at this as a continued support just above the 79 handle. We think that this market is going to continue to consolidate, and as such there is much more room to move higher than lower at the moment. In fact, in order to sell this market we would have to break down the 79 level on a daily close in order to seriously consider it. As far as buying is concerned, we feel that small position can be initiated where we are, but understand that it is essentially a short-term trade as well.