The FXCM US Dollar Index (equally weighted basket of USD versus EUR, JPY, GBP & AUD) failed again last week near the 78.6% retracement of the April – May decline in the 12,050 area. There is some vulnerability in the index the longer it stays below this pivot. However, I would need to see last week’s low around 11,975 give way to trigger a double top on the daily and prime the market for any sort of serious correction lower. Traction over 12,050 would alleviate concerns of a more immediate correction and set the stage for a re-test of the April high.
Still short EUR/USD with a trailing stop now over 1.1100 (closing basis). Will look to add to position on a daily settlement below 1.0800.
