Home » Currency Option Trading » US Dollar Index – Further Dollar Weakness 13th May 2009

US Dollar Index – Further Dollar Weakness 13th May 2009

Dollar Index Chart - 13th May 2009

Dollar Index Chart - 13th May 2009

Yesterday’s wide spread down bar on the US dollar index, added further momentum to the general dollar weakness that we are now seeing across all the major foreign exchange markets, with little in the way of technical signals to suggest that this is likely to end in the short term. Indeed all the signs at present are that this is set to continue for some time, with all three moving averages now weighing heavily on the index, with the 80.50 region and above providing the first test of support to any sustained move lower. Should this price region be breached then we could see a move lower still to re-test the 78.50 area last seen in December 2008. Yesterday’s fall has been attributed to a report in the London Financial Times suggesting that the US could lose its AAA status, which seems highly unlikely, coupled with continued optimism in the equity markets which has a pull through effect into commodities, with oil prices continuing to surge higher, despite the increasing stockpiles, and with many commentators suggesting that the markets are now trading on sentiment rather than fact – time will tell. All the factors are now combining into a self sustaining rally which may collapse in due course, resulting in a return of US dollar strength in due course.

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