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US Dollar Headwinds Mount as S&P 500 Breaks Technical Resistance

US Dollar Headwinds Mount as S&P 500 Breaks Technical Resistance

2012-01-04 05:15:00
Ilya Spivak, Head Strategist, APAC
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THE TAKEAWAYThe US Dollar may see greater selling pressure after the S&P 500 broke a technical resistance barrier, hinting at fading demand for the safe-haven currency.

S&P 500 – Prices took out resistance at 1265.30, clearing the way for a push higher to challenge the October 27 high at 1292.90. A close above this barrier would overturn the bearish bias of overall positioning in favor of a more neutral tone. The 1265.30 level has been recast as near-term support.

US_Dollar_Headwinds_Mount_as_SP_500_Breaks_Technical_Resistance_body_Picture_5.png, US Dollar Headwinds Mount as S&P 500 Breaks Technical Resistance

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL As we suggested last week, prices recovered after putting in a Hammer candlestick above resistance-turned-support at thetop of a falling channel set from mid-November. The bulls took out interim resistance at challenge the November 17 high at 103.35, with a break above this barrier marking a material shift in tone from an outright bearish bias toward a more neutral one. Continued gains above resistance expose 106.05. Near-term support lines up at 101.28.

US_Dollar_Headwinds_Mount_as_SP_500_Breaks_Technical_Resistance_body_Picture_6.png, US Dollar Headwinds Mount as S&P 500 Breaks Technical Resistance

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD Prices recovered as we discussed last week after showing a Hammer candlestick above support at 1532.45, the September 26 wick low. Prices are now testing support-turned-resistance at the bottom of a falling channel set from early November, with a break above this boundary exposing 1677.05. Near-term support lines up at 1573.67.

US_Dollar_Headwinds_Mount_as_SP_500_Breaks_Technical_Resistance_body_Picture_7.png, US Dollar Headwinds Mount as S&P 500 Breaks Technical Resistance

Daily Chart - Created Using FXCM Marketscope 2.0

US DOLLAR The greenback moved lower as expected. The bears have now overcome minor support at 9897, aiming at the former Head and Shoulders neckline at 9823 next. A break below this barrier on a daily closing basis would amount to a material bearish shift in tone for the greenback. The 9897 level has been recast as near-term resistance.

US_Dollar_Headwinds_Mount_as_SP_500_Breaks_Technical_Resistance_body_Picture_8.png, US Dollar Headwinds Mount as S&P 500 Breaks Technical Resistance

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow me on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

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

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