USD Graphic Rewind: Dollar Index Continues Higher; We Remain Cautiously Optimistic
Created using Bloomberg
The dollar index pushed above resistance at 75.00 on Wednesday after consolidating over the last few days just below this level. Amid weaker global equities, sliding commodities and a soft euro, due to Greek debt restructuring chatter just wont die down, have helped propel the dollar index higher and above initial resistance confirming a short-term base. We expect the index to now consolidate its 75.00-plus move before making an assault on the next resistance near 76.00.
While the short-term base carved out on daily charts is a tad unorthodox and gains have been rather too sharp for our liking we are encouraged by how things are playing our on weekly and monthly charts – we mentioned on Tuesday the possibility of a bullish outside month. The violent moves recently leave us a little wary that things could be unwound just as quickly but for now we will continue to look higher as sentiment looks set to continue to benefit the dollar. We mentioned earlier in the week that sentiment would be the key factor in whether the dollar would make a meaningful reversal of its recent period of weakness and with sentiment toward the EMU periphery souring once again the dollar is well positioned to continue rising.
Written by Jonathan Granby, DailyFX Research Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.