US Dollar Index - Daily Candle Chart 15th July 2009

This morning’s price action in the US Dollar Index has perhaps provided us with a portent of the fate of the US Dollar in the short term as the recent sideways consolidation begins to unwind and the Dollar Index begins to roll over like a stricken vessel, to sink quietly below the waves.  Yesterday’s candle struggled to break above all three moving averages and ended the day in a compressed trading area and perhaps signalling that a breakout was imminent, which is occurring at the time of writing.   We now need to consider how deep this move is likely to be which has largely been triggered by better than expected fundamental news on the economic calendar in the US this morning, signalling a creeping optimism in investor confidence as they begin to buy equities once again.   The first port of call as we press the down button is that at 78.50 and if this is breached then we may well see a dramatically deeper fall, first towards the 75 region and then onwards towards 73/71 area, last seen in late August 2008.

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US Dollar Index - Daily Candle Chart 9th July 2009

The US Dollar Index continues to struggle higher from the current sideways consolidation of the last 5 to 6 weeks and yesterday’s candle was symptomatic of this ongoing battle, closing the session as a “spinning top” with a narrow body and small wicks to top and bottom.   The positive signs for any US Dollar bulls are that the Index has, at least, managed to hold tentatively above all three moving prices, although the significance of these technical indicators is greatly reduced at present due to their bunching following the period of sideways price action.   The Index seems to have found the 81 price handle an almost impossible hurdle to clear and this was reinforced both yesterday and also on Tuesday with the high of each day failing to reach this psychological level.  We must therefore be patient and wait for the Dollar Index chart to provide us with a clear trading signal for dollar strength or weakness, which to date has been lacking for the past month or so.

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 USD 7th July 2009

Despite Jean-Claude Trichet’s best endeavours to talk up the US Dollar we are not seeing any desire by the Dollar Index to co-operate with this view as yesterday’s candle (and ROC indicator) simply continues to confirms a bearish picture for the US Dollar.  Yesterday’s candle closed marginally above both the 9 and 14 day moving averages and fractionally below the 40, however, these technical indicators are providing little in the way of substantive analysis, since the sideways action has merely bunched all three together in a twisted strand.  It is difficult to see at present any sign on the daily Dollar Index chart of a major revival to the fortunes of the US Dollar and only a concerted move with a break and hold, firstly above the 83 to 84 price levels, followed by one through the 87 price will confirm any rally.  In the meantime we must wait to see whether the bearish downward pressure eventually tips the Index over the edge with a further deeper move to re-test 78.50.

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.