US Dollar Index - Daily Chart USD 6th July 2009

Friday’s doji candle provided little in the way of guidance or meaningful analysis given that the US market was closed for the 4th July national holiday, and the only minor point to note was that the low of the day found support from the 9 day moving average.  The significant news event of the weekend for the US Dollar was the statement by ECB President Trichet in which he fully endorsed the US Dollar as the world’s reserve currency, in effect sending a clear message to the forex market that the time has come to buy the US Dollar once again and consequently sell the Euro.   As a result in early trading this has produced a strong rebound in the Dollar Index which is now currently holding the 40 day moving average and looks set to continue further.  The key to any sustained rally will be the demolition of the various obstacles now in its path as we move higher, the first of which is minor resistance at the 82.50 to 83 region, followed by the more significant level between 84 and 87.  For any sustained rally we will need to see a break above and hold above this last figure which in turn would then signal a major rally in the US Dollar.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.

US Dollar Index - Daily Candle Chart 3rd July 2009

The US Dollar Index was one of the principal beneficiaries of the lacklustre reaction to the NFP data yesterday ending the day on a wide spread up bar which closed above both the 9 and 14 day moving averages once again.   Sadly the reaction was insufficient to take the Index back above the psychologically important resistance in place just below 81 so it is far too early to suggest that this can be considered a reversal in the fortunes of the US Dollar in the medium term, and in the cold light of day has simply added a further bar to the sideways consolidation at this price level.  Today is unlikely to provide anything in the way of a measured reaction to yesterday’s news as the US markets are closed for Independence Day, and therefore we need to wait until early next week for further fundamental news on the economic calendar, either to establish a firm trend or simply to continue in the current sideways movement. It is interesting to note from yesterday’s price action that the high of the day failed to penetrate the 40 day moving average which seems to be adding to the general downwards slide at present.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.

US Dollar Index Daily Chart - 1st June 2009

Yesterday’s moderate show of dollar strength as reflected in the daily chart for the Dollar Index was more of a reaction to end of month and end of quarter liquidations and position squaring rather than any firm evidence of a shift in the market sentiment towards the US Dollar.   Indeed it could be said that the fate of the US Dollar  is inextricably linked to both NFP Employment Data and ECB interest rate statement and by association crude oil prices, which will collide tomorrow at 13.30 GMT at which point we may have some clue as to the future direction for the Dollar Index.  From a technical perspective yesterday’s up bar, whilst an encouraging sign failed to close above the 9 and 14 day moving averages, and indeed it could be argued that these acted as an obstacle to any move higher and until the fundamental news is released tomorrow it seems that we may have a further day of sideways consolidation at the 79-81 price range.   The 40 day moving average is still weighing heavily on the index and until we see a sustained break and hold above the 81.50 region coupled with solid support from all three moving averages, then the Dollar Index seems destined to remain in this desultory and waterlogged trading pattern.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.