USD Graphic Rewind: Buck Ekes Out Gains as Euro Fails By 100-day SMA
The dollar index managed to eke out a higher close yesterday, notching up its 4th straight daily gain as the euro was unable to extend its gains past the 100-day SMA despite multiple tries. Traders repeated attempts to push Eur/Usd above the moving-average more or less dictated price action through the morning with every failure resulting in a pullback for the euro and a bout of dollar strength. In the dollar index chart we can see this through candle’s where the wick extends toward the 78.30 level and is followed by a large blue candle after, representing the pullback in the euro after a failure, most noticeably between 7am and 9am. After repeated failures in the euro price action went mostly sideways through most of the US session before declining early in Asia. Boosted by optimism about the global recovery the dollar was sold off as investors picked up riskier, higher yielding, assets and pushed regional equities higher.
Some consolidation can be expected today and possibly in coming days but any move lower should be well supported at 78.00 and again at 77.50 ahead of a fresh push higher toward 79.00 and even toward 80.00. We look for the euro to fail out again today by the 100-day SMA before resuming its recent downtrend after breaking through neckline support of a head & shoulders top formation last week.
Written by Jonathan Granby, DailyFX Research Team
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