USD remains pressured
I view cyclical turn windows as opportunities for trends to re-assert themselves. Sometimes they do and sometimes they don’t, but there are always implications. Last week, for instance, the FXCM US Dollar Index (equally weighted basket of USD vs. EUR, JPY, GBP & AUD) had a turn window. There was an initial reaction around the 50% retracement of the December – April advance around 11,750, but the index could not make any real headway. After this consolidation the index turned down again and took out this potentially significant cyclical low. A lost opportunity for the broader USD uptrend to reassert itself. The implications are that this correction against the primary trend will continue which certainly looks to be the case after yesterday’s wide range bar. The 61.8% retracement of the December-April advance near 11,655 is an important near-term pivot with traction below needed to set off the next leg lower in the index. A move back through 11,800 is needed to alleviate immediate downside pressures.
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