USDOLLAR Index Back to 21-EMA, Trend Support since Late-October
- USDOLLAR Index last visited daily 21-EMA last Friday.
- USDJPY looks like it could be the fly in the ointment.
- See the February Forex Seasonality report and the implications for the majors.
The USDOLLAR Index is back in familiar territory. After falling back to its daily 21-EMA ahead of the January NFP report, the greenback found support and traded to fresh yearly highs if only briefly. After a week of consolidation and profit taking, we find ourselves at this familiar crossroads once again.
The daily 21-EMA has been of significance to the USDOLLAR Index since late-October, right around the time the Bank of Japan unveiled its latest update to its QE program. With support having been found on December 10 and 16, January 14 and 15, and February 6, the daily 21-EMA has established itself as the most important dynamic level of support in the greenback's three-plus month bull run.
Whereas last week it was AUDUSD and USDJPY resilience that provoked the USDOLLAR Index back to this key level, this week it's been EURUSD and GBPUSD. Yet USDJPY remains the cog in the wheel to watch: having surged after the January NFP report, it now finds itself on the verge of marking a false breakout, flirting with the descending trendline off of the December 7, January 2, and February 6 highs.
See the above video for technical considerations in EURUSD, USDJPY, GBPUSD, and AUDUSD.
--- Written by Christopher Vecchio, Currency Strategist
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