Home » Currency Option Trading » US Dollar Index – Daily Chart 27th May 2009

US Dollar Index – Daily Chart 27th May 2009

US Dollar Index Daily Candle Chart - 27th May 2009

US Dollar Index Daily Candle Chart - 27th May 2009

Yesterday’s candle on the daily dollar index chart has provided an interesting pause point in the general bearish move lower for both the dollar and the index, closing the day with an inverted hammer which could, and I stress the word could, indicate a temporary reversal in general dollar weakness and a possible move higher in the short term.  From a technical perspective this candle can often signify the final stage of bearish sell off and an early indication of bullish entry to the market.  All of this must be considered against the geopolitical backdrop of the Korean situation which all markets seem to be considering before reacting in any decisive way, and under normal circumstances I would have expected to see a sustained move higher in the index as market participants move into the US dollar as a safe haven.  However, this does not appear to be happening at the moment as we see commodity prices such as oil and gold continue their upward trajectory.  With all three moving averages still pointing lower on the dollar index chart, it is dangerous to view one candle in isolation and we must therefore wait for any confirmation or otherwise in the daily chart, but it could be an early indication of a temporary change in sentiment for the US dollar, particularly when viewed against other major cross pairs which are exhibiting a similar possible reversal or pause point such as in the euro dollar.

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