THE TAKEAWAY: The US Dollar failed to sustain upward momentum as expected, sinking to probe key support, while the S&P 500 may have produced a downside breakout.

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US DOLLAR TECHNICAL ANALYSIS A recovery from channel support proved short-lived as expected, with prices now testing below the formation bottom (10791) to challenge the 23.6% Fibonacci retracement at 10764. A break below that exposes the 38.2% level at 10694. Channel resistance is now at 10882.

Forex_US_Dollar_Falters_SP_500_Flirts_with_Downside_Breakout_body_Picture_5.png, US Dollar Falters, S&P 500 Flirts with Downside Breakout

Daily Chart - Created Using FXCM Marketscope 2.0

S&P 500 TECHNICAL ANALYSIS – Prices edged below support in the 1649.60-51.60 area, marked by the 23.6% Fibonacci retracement and the 100% expansion. Sellers now aim to challenge the 38.2% level at 1629.40. Alternatively, a move back above 1651.60 targets the 123.6% expansion at 1676.50.

Forex_US_Dollar_Falters_SP_500_Flirts_with_Downside_Breakout_body_Picture_6.png, US Dollar Falters, S&P 500 Flirts with Downside Breakout

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Prices completed a Bullish Engulfing candlestick pattern above support at 1348.97, the 38.2% Fibonacci retracement level, hinting at gains ahead. Initial resistance is at 1402.11, the 23.6% level, with a break above that targeting the 14.6% Fib at 1434.86 and the May 3 high at 1488.00. Alternatively, a move below support eyes the 50% expansion at 1306.02.

Forex_US_Dollar_Falters_SP_500_Flirts_with_Downside_Breakout_body_Picture_7.png, US Dollar Falters, S&P 500 Flirts with Downside Breakout

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS Prices followed the formation of a bearish Dark Cloud Cover candlestick pattern with the completion of what appears to be a Head and Shoulders topping chart formation. The break below support at 93.34 exposes the next downside barrier at 92.11. The H&S setup broadly implies a measured downside objective at 90.05. The 93.34 level has been recast as near-term resistance, with a move back above that eyeing the May 28 high at 95.89.

Forex_US_Dollar_Falters_SP_500_Flirts_with_Downside_Breakout_body_Picture_8.png, US Dollar Falters, S&P 500 Flirts with Downside Breakout

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 Ilya on Twitter at @IlyaSpivak

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