USD Graphic Rewind: Dollar Index Making its Case To Go Higher
The dollar index consolidated its recent sharp move higher on Monday but any losses were well contained by rising fears regarding the situation in Greece. Over the weekend a report in a German newspaper had announced that Greece was considering quitting the euro, early on Monday officials of all strips scrambled to deny this report. However, the markets have adopted something of a ‘no-smoke-without-a-fire’ approach and believe something has to give. Speculation was fuelled further when S&P cut Greece’s credit rating further into junk status and Moody’s warned of a multi-notch cut.
We mentioned yesterday that we see the buck’s fate woven together with sentiment toward the EMU periphery, we noted that if EMU concerns once again rise to the surface then we could be in for a period of USD strength. It certainly appears from the first day of trade that EMU fears are rising in the hearts and minds of investors and we feel that the buck is well positioned to benefit.
Initial resistance comes from the 75.00 level, a break and close above will help put the index on a surer short-term footing before making an assault on the 76.00 region. We continues to eye weekly and monthly charts to help confirm the recovery in the buck, on monthly charts we see the possibility of a bullish-outside month forming, while this is still ways off it is worth keeping an eye on.
Written by Jonathan Granby, DailyFX Research Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.