- USD Index
From a technical perspective the USD index remains inherently weak with yesterday’s price action merely confirming this view, with the index closing once again below all three moving averages which are pointing sharply lower. With the index now firmly established below the 77.50 level it will take a dramatic reversal in sentiment for the US to recover from this position and certainly at present there is no technical evidence on the daily chart that this is likely to happen in the short term. However, many forex market analysts and commentators are now suggesting that the US Dollar is heavily oversold and that we may see such a reversal even as early as this week. In addition it has been suggested that some member states of the forthcoming G20 meeting are likely to apply some indirect pressure to the US government to instigate such a reversal by whatever means as these countries are unable to sustain such chronic dollar weakness. The weekly USD index chart is extremely bearish with last week’s wide spread down bar adding further to this bleak picture and the only area of support now available is that in the 75 to 76 price level and should this fail to provide a springboard then we are now looking at a further drop down to 72.30 and below, last seen in mid 2008.
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