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Forex: US Dollar Shows Imminent Breakout Risk

Forex: US Dollar Shows Imminent Breakout Risk

John Kicklighter, Chief Strategist

We have seen Volatility measures trend towards multi-year lows for some time, but the threat of a rebound in risk aversion (troublesome for US equities but a boon to the safe haven dollar) has never felt imminent. That long-term risk is still there, but we have recently seen evidence of a more immediate risk spike in volatility and short-term burst for sentiment trends. With the uncertainty in the Fiscal Cliff and Euro-area crisis backing longer-term issues, we find direct contrast in the lowest activity read from the benchmark US Dollar Index in years. A breakout is inevitable. We discuss the fundamental factors that can help decide direction and shape momentum.

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