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US Dollar Index – Daily Chart 12th June 2009

US Dollar Index - Daily Chart 12th June 2009

US Dollar Index - Daily Chart 12th June 2009

The bearish tone for the dollar index continued in yesterday’s trading, helped along by Dennis Lockhart’s anti dollar rhetoric which once again confirmed the US’s administration somewhat relaxed attitude to a weak and weakening dollar, and until this changes it seems unlikely that we will see a sustained move for the index.  Yesterday’s candle ended the session as a long legged doji opening marginally above the 14 day moving average and closing marginally below and adding to the general downward trend of the past 4 days.  On a more positive note both these moving averages are now converging suggesting that the 9 day may be about to cross the 14 day providing a short term respite to the relentless downward pressure.  With the G8 and G20 meetings now in progress any comments (authorized or otherwise) from attendees will be seized by the markets making trading today extremely challenging.  As I have suggested several times before failure by the dollar index to re-base at the current level could lead to a deeper and more serious move possibly to re-test support in the 76 region and should this fail to hold then we could see a move as low as 72.50 in the next few months.  It is interesting to note on the weekly chart that we may end this week with a long legged doji but as this comes on the back of bullish signal the previous week this is presenting us with a contradictory picture, and indeed in many way has failed to confirm the bullish signal of last week, so may well be interpreted as further negative sentiment towards the US dollar by the market.

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