Dollar Index Weekly Chart Points to Further Losses
We maintain our bearish outlook for the Dow Jones FXCM Dollar Index (ticker: USDollar) into the new week, while we had forecast the possibility of a post-Bernanke pop higher, that never really played out and we now look once again to the downside, both in the short and medium term. With last weeks third consecutive negative weekly close, accompanied by the topside failure above 9,500 we now look for a break of support at 9,400 to open a test of range lows by 9,320. Adding to our outlook is the moves in Eur/Usd in recent days as it breaks out of its bearish pattern exposing range highs and suggesting that a move higher is in the offing. This lines up perfectly with our bearish outlook for the index, as Eur/Usd moves higher the DXY will move lower.
In the medium term, we look for a break of 9,300 and a close below this key level to expose the psychologically important 9,000 region further down. The downside is looking mighty vulnerable with very little support between the range lows at 9,320 and the psychological 9,000 level. For now then we remain very bearish on the buck, only a break and close back above 9,500 will relieve the immediate downside pressure and a test of the falling trend line and/or range highs will be needed for a strategy re-think.
Written by Jonathan Granby, DailyFX Research Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.