We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.81%, while traders in USD/CAD are at opposite extremes with 70.99%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/gycgoR3uaf
  • RT @charliebilello: Volatility Index: +47% today, 7th largest 1-day spike w/ data going back to 1990. $VIX https://t.co/oqnst05BNi
  • RT @LiveSquawk: Fed's Mester: Economic Impact Of Coronavirus Outbreak Depends On How Deep And Long-Lasting It Is
  • US equity close: $SPX -110 (-3.3%) $DJI -1031 (-3.6%) $NDX -355 (-3.7%)
  • RT @ClevelandFed: #LorettaMester: My current view is that monetary policy is well-calibrated to support our dual mandate goals, and a patie…
  • RT @PowerLunch: Restrictions in China are still tight as the country faces the Coronavirus. @onlyyoontv tells us more about authorities co…
  • Well, that was not a very encouraging day for capital markets. Remember, flat is also an option in the markets
  • Indices Update: As of 21:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.02% US 500: 0.01% Germany 30: -0.45% France 40: -0.52% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/JkDZ0UQlwb
  • Gold prices have remained bid for much of the past two weeks, and of recent, as that risk aversion theme has further priced-in to global markets. Get your $XAUUSD technical analysis from @JStanleyFX here: https://t.co/ylBpk8vHvX https://t.co/mRbft4222q
  • #Crypto update: $BTC -2.9% $BCH -6.3% $LTC -5.5% $XRP -4.9% $ETH -3.2%
US Dollar Index Breaks Descending Channel as Stock Rally Falters

US Dollar Index Breaks Descending Channel as Stock Rally Falters

2011-10-17 22:24:00
Michael Boutros, Technical Strategist
Share:
US_Dollar_Index_Breaks_Descending_Channel_as_Stock_Rally_Falters_body_Picture_2.png, US Dollar Index Breaks Descending Channel as Stock Rally FaltersUS_Dollar_Index_Breaks_Descending_Channel_as_Stock_Rally_Falters_body_Picture_3.png, US Dollar Index Breaks Descending Channel as Stock Rally Falters

The greenback snapped a three day losing streak today with the Dow Jones FXCM Dollar Index (Ticker: USDollar) climbing 0.63% by the close of North American trade. Equity markets were in a steady decline throughout the session as investors scaled back on risk assets with the Dow, the S&P, and the NASDAQ falling 2.13%, 1.94%, and 1.98% respectively. Debt concerns were rekindled after officials failed to produce a viable plan to avoid a Greek default and recapitalize ailed banks at the G20 meeting this weekend and although leaders cited plans to be released by next weekend’s EU meeting, comments made by German Chancellor Angela Merkel suggested that the resolution will not be the “silver bullet” markets participants were searching for. Accordingly investors went back on the defensive with higher yielding assets and risk currencies sliding across the board.

The dollar pared early losses as stock continued to slide throughout the session. The index broke back above the key 38.2% Fibonacci extension taken from the June 2010 and November 2010 crests at 9745 after encountering support at the 50-day moving average just shy of 9700. A hold above this level remains paramount for the greenback with a break below risking substantial losses for the reserve currency. Look for the slope of daily relative strength to steepen after rebounding off RSI support at the 44-level.

US_Dollar_Index_Breaks_Descending_Channel_as_Stock_Rally_Falters_body_Picture_4.png, US Dollar Index Breaks Descending Channel as Stock Rally Falters

A closer look at the index shows the dollar breaking out of a well defined descending channel formation dating back to October 4th with the greenback likely to move higher as investors seek refuge from growing global growth and default concerns. Interim resistance now stands at the 38.2% Fibonacci retracement taken from the August 1st advance at 9825 with subsequent ceilings seen at 9900 and the 23.6% retracement at 9943. Immediate support rests at 9760 backed by the 50% retracement at 9730 and 9700.

US_Dollar_Index_Breaks_Descending_Channel_as_Stock_Rally_Falters_body_Picture_5.png, US Dollar Index Breaks Descending Channel as Stock Rally Falters

The greenback advanced against three of the four component currencies highlighted by a 1.77% advance against the Australian dollar. As market sentiment takes a defensive stance, the aussie is likely to remain under pressure as investors jettison higher yielding assets in favor of the safety of the greenback. Overnight the RBA releases minutes from the October 4th policy meeting which could add pressure on the battered aussie as the central bank highlights growing uncertainty regarding both the European sovereign debt crisis and prospects for global growth. The yen tops the performance charts at the close, just as it did at the open, advancing 0.50% against the dollar after moving a full 142% of its daily average true range. Despite much speculation, the yen has maintained its haven appeal and remains well supported on the back of risk-off flows. However as the USD/JPY pair approaches pre-intervention levels, investors may find it increasingly difficult to move into the yen on concerns of further action from the Bank of Japan.

Tomorrow’s economic docket is highlighted by the September producer prices report with consensus estimates calling for price pleasures to ease with a print of 0.64% y/y, down from 6.5% y/y. Traders will also be lending a keen ear to remarks made by Fed Chairman Ben Bernanke tomorrow when he speaks to the Boston Fed Bank on the long-term implications of the great recession. The dollar should remain well supported so far as investor appetite remains subdued, with risk assets likely to continue to pare some of the sharp advances seen last week.

Upcoming Events

Date

GMT

Importance

Release

Expected

Prior

10/18

12:15

LOW

Fed's Eric Rosengren Speaks on U.S. Economy

-

-

10/18

12:30

MEDIUM

Producer Price Index (MoM) (SEP)

0.2%

0.0%

10/18

12:30

HIGH

Producer Price Index (YoY) (SEP)

6.4%

6.5%

10/18

12:30

MEDIUM

Producer Price Index Ex Food & Energy (MoM) (SEP)

0.1%

0.1%

10/18

12:30

HIGH

Producer Price Index Ex Food & Energy (YoY) (SEP)

2.3%

2.5%

10/18

13:00

MEDIUM

Net Long-Term TIC Flows (AUG)

-

$9.5B

10/18

13:00

MEDIUM

Total Net TIC Flows (AUG)

-

-$51.8B

10/18

14:00

LOW

NAHB Housing Market Index (OCT)

15

14

10/18

17:15

HIGH

Fed Chairman Ben Bernanke Speaks on Central Banking

-

-

Written by Michael Boutros, Currency Analyst with DailyFX.com

To contact Michael emailmboutros@dailyfx.comor follow him on Twitter @MBForex.

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.