US Dollar Index Maintains Upward Trajectory amid Temped Equity Gains
The Dow Jones FXCM dollar index ended the session slightly lower as risk appetite returned to markets. The ascending channel that dates back to the start of the month remains intact however, with interim support seen resting at 9515. Topside resistance is eyed at the upper bound trend line, currently just below the 96-handle. A breach here sees subsequent ceilings at 23.6% Fibonacci retracement taken from the November 30th decline at 9590, and 9660.
A daily chart gives a better perspective on today’s price action with the index encountering resistance at the 20-day moving average, currently at 9540. The 9515 trend line support mentioned earlier coincides with the July 22nd 2008 lows. Subsequent floors eyed at 9460 and the recent May 2nd low of 9370.
A quick peek at relative performance tells the story, with the greenback losing ground against all the majors. The aussie remains the chief beneficiary of the dollar’s weakness today as commodities pared some of the steep declines seen in the later part of last week. Increased risk appetite continues to see strength in commodities and commodity backed currencies as traders go back on the hunt for high-yielding assets.
With the economic docket relatively quiet over the next few sessions, price action in the dollar will be increasingly vulnerable to developments out of the euro zone as traders digest circulating reports of a possible Greece-Euro decoupling.
Written by Michael Boutros, Currency Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.