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US Dollar Index 4 Nov 2009

US Dollar Index 3 Nov 2009

US Dollar Index 3 Nov 2009

The US dollar index is now poised, ready and waiting for today’s seminal meeting and announcement from the FED which could well seal the fate of the dollar for currency options trading, and certainly for the next few weeks, with yesterday’s candle hardly providing encouraging signals for US Dollar bulls, ending the trading session as a narrow spread up candle with a deep upper shadow to the main body. Whilst the marginal close above all three moving averages is welcome, the depth of the shadow above is a worrying signal, and suggests that bearish sentiment remains firmly in place, despite the mini rally of the last few days. With progressively deeper levels of resistance above as we move higher, the US dollar will need considerable momentum to break and hold above all these various price levels if it is to battle its way back to strength, with today’s meeting possibly the first in several such days. Should the FED signal an intent to raise rates sooner rather than later, then in simple terms this will be good news for the dollar and we could expect to see a break above the current resistance in place in the 76.50 to 77.50 as a result. This could be further reinforced on Friday, should the Non Farm Payroll figures come in better than expected, but as ever, should these be worse than expected and the FOMC meeting fail to deliver any helpful statements, then the long downwards trend may be re-establised once again. For currency options trading this is a tricky few days, and in my view any positions should be well hedged as we wait for a volatile three days.

R1:  76.69   S1:  75.94

R2:  77.13   S2:  75.62

R3:  77.44   S3:  75.19