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USD Graphic Rewind: Dollar Index Consolidates Near 2010 Lows as Support Turns to Resistance
Written by article default Tuesday, 17 May 2011 11:50
Dow Jones FXCM Dollar Index, Created using Bloomberg
The dollar index got whipped around a little yesterday, as we had suggested was likely, as it neared the 76.00 level. The index ultimately closed modestly lower on the day despite spending a decent amount of time both well bid and well offered as currencies consolidated recent moves. We repeated our commentary yesterday that we see trade remaining choppy with resistance at 76.00, 76.40, 77.00 and 77.45, once these barriers have been cleared and trade settles then we can start to look at a longer-term picture. However, if the dollar index fails to continue its current northern journey then traders may pause just long enough to reassess market direction and this current bout of USD strength could be a short-lived affair.
In the near-term we remain highly bullish on the dollar’s recovery rally, provided these aforementioned resistance levels can be overcome, and only a break and close back below 75.00 will negate this short-term outlook. The current consolidation around the support turn resistance by the 2010 lows could continue into Tuesday’s trade as focus remains on EMU peripheral developments, Middle East tensions and IMF Strauss-Kahn’s arrest.
Written by Jonathan Granby, DailyFX Research Team