US Dollar Technical Analysis: Uptrend Resumption at Hand?

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Talking Points:

• US Dollar Technical Strategy: Long via Mirror Trader USD Basket **
• Prices Launch Rebound, Marking Good on Bullish Candlestick Setup
• Near-Term Resumption of Structural Uptrend Unconfirmed for Now

The Dow Jones FXCM US Dollar Index recovered as expected following the formation of a bullish Piercing Line candlestick pattern. Prices have completed four consecutive days on the upside and now stand poised to challenge resistance capping gains since late May.

A daily close above the 12043-59 area, marked by the May 31 highand the 61.8% Fibonacci expansion, exposes the 12123-49 zone bracketed by the March 12 top and the 76.4% level. Alternatively, a turn back below the 50% Fib at 12008 opens the door for a challenge of the 38.2% expansion at 11956.

On a long-term basis, the trend in the US Dollar has favored the upside since mid-2011. Confirmation of near-term resumption remains elusive for now, particularly considering the hefty dose of fundamental event risk on tap ahead. With that in mind, we continue to hold a passive long position via the USD basket but opt to wait before putting on new exposure for the time being.

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** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.