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US Dollar Index 1 April 2010

Dollar Index Chart 1 April 2010

The dollar index ended yesterday’s trading session with a relatively wide spread down candle which breached the 9 day moving average but found good support from the 14 day immediately below suggesting that this short term reversal is merely a technical pullback and not a significant change in sentiment.  One reason for yesterday’s fall was largely as a result of the worse than expected ADP employment figures which posted a further negative -23k against a forecast of +40k.  However, despite this news the index remained relatively well balanced and with the deep price support immediately below at 81, coupled with the proximity of all three short term moving averages these should combine to provide a cushion for the index and the US dollar.  The longer term outlook for the index still remains bullish and provided the non farm payroll data comes in more or less on target tomorrow then we should expect to see the index break and hold above 82 in due course and push higher thereafter with renewed momentum as we move away from the holiday period.  The only caveat to this analysis is the thin trading volumes of the next few days which may result in some random price action.

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