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USDollar Technical Analysis: Another Higher-Low Setting Up, Focus Sits on 11,789

USDollar Technical Analysis: Another Higher-Low Setting Up, Focus Sits on 11,789

Tyler Yell, CMT, Currency Strategist

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Talking Points:

  • USDollar Technical Strategy: Waiting for 12,015 to Break Before Bullish Bias is Cemented
  • March 13th, 2015 Daily Range Resistance Held: Focus on Retest
  • Higher Lows Favor Ascending Triangle Until Awaiting Breakout

A disappointing Federal Reserve hold of the interest rate near zero, rather than a lift-off, brought the dollar index to a three-week low. This allowed commodity currencies and emerging-market FX to see one of their strongest multi-day rallies against the USD since June however, a series of higher lows continues to be in focus as a strong close on Friday could set up for another eventual test of the March 13, 2015 daily Range resistance. A breakout through this level would further cement the dollar uptrend and continue to favor selling commodity FX and EUR.

The short-term resistance in focus is 12,015/16. A short-term chart will show you that is the September 11 and September 15 high that we saw before turning lower into and through FOMC. Should the 12,015/16 level break that will give a clean preference to retesting the September 4 high of 12,095. Today’s low at 11,865 will mark support given the bullish hammer close. A break below 11,865 would damage the trend structure and turn the last hope support for now to 11,879.

The September 17 close for the US dollar index stopped on the 61.8% retracement of the August 24 to September 4 range. A push higher from here could favor a resumption of the uptrend at the expense of other currencies. The correlated US 2yr Yield Fell 13 basis points yesterday bringing a two week low however, the lack of Federal Reserve action could ironically signal better opportunity ahead four dollar longs against more distressed currencies such as EUR, GBP, & AUD. We continue to favor the long side absent a daily close below 11,789, which would alter the ascending triangle view into a more bearish stance. T.Y.

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