US Dollar Index - Daily Candle Chart 31st March 2009

Friday’s candle provided a slight pause in the recent rally in the US dollar index of the last few days, and closed with a shooting star pattern following the wide spread up bar of the previous day. The close of the day finished above the 9 day and 14 day moving averages, suggesting that the bullish tone is back in place in the index, but for the move to be firmly established we will need to see prices break and hold above the 40 day moving average, whilst clearing the resistance immediately ahead at 86-87. If this region is breached then we could see a move higher to re-test the 88 -89 region once again. The only slight issue to this move higher is the shooting star candle, which is often the pre-cursor to a possible reversal in prices, so it would not be a surprise to see the index move lower from this candle. However from this afternoon’s session the index has moved marginally higher, so we need to wait and see whether this candle is indeed confirmed or ignored by moving higher in the next few days, and perhaps of more significance is the fact that the index opened gapped up from the close on Friday, which would seem to confirm the bullish sentiment.

The dollar index is an excellent indicator for highlighting dollar strength and weakness against a basket of currencies, so whether you are trading currency options, currency futures, or currencies in the spot markets, it should be one of the tools in your toolbox to provide a broader view of the currency markets. You can keep up to date with all the latest currency news on the economic calendar, the latest live prices on the currency charts, or the latest live news, by following the appropriate link.