US Dollar Index - Daily Candle Chart 11th August 2009
As market sentiment towards the US Dollar appears to have turned more bullish it is a good time to re-visit the Dollar Index where this newly found optimism is clearly demonstrated on the daily Dollar Index chart. Yesterday’s narrow spread up bar continued the positive mood but was somewhat muted after Friday’s strong surge which broke back above the 9 and 14 day moving averages. The next two days will prove to be pivotal for the US Dollar with the fundamental picture largely dictating whether we see a breach of the strong resistance now directly ahead, or alternatively whether a further collapse will ensue. The reason, of course, is the two day FOMC meeting which gets underway later this morning in the US, and despite what technical traders may wish to believe the subsequent statement and interest rate decision will be all enveloping. Should the Committee indicate that the worst of the recession is behind us and hint at any raising of rates in due course, then this will be seen as a positive for the US Dollar and an opportunity to buy what, up until now, has been a lower yielding currency. If this occurs then we will see a surge of Dollars buyers and a consequent break above the resistance level outlined above which should then provide a good technical platform for a strong move higher.
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