US Dollar Index Forecast December 4, 2012, Technical Analysis

The US Dollar Index did very little during the session on Monday, as traders weigh out the possible results of the fiscal talks in the United States. Currently, we see the 80 handle as significant support, and although we are just below it, we haven’t necessarily broken through all of the noise below. In fact, we think it’s going to be hard to break down below the 79 handle, but it is at that level that we would recognize this is a broken market. The trend is down, so that of course would be the easiest trade to take.

Alternately, we could see some type of support between here and 79, and that would of course be a buy signal. This is especially true if that happens within the next couple of sessions. As long as we don’t fall too precipitously, we do have quite a bit of a cushion below us that could cause a positive reaction in the US dollar.