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USD Index 3 Feb 2010

Dollar Index Chart 3 Feb 2010

Following 2 strong weeks of performance from the US dollar the question, of course, for this week is whether the index will continue to perform just as well as we begin to approach a significant area of potential resistance on the weekly USD index chart. The reversal higher was first signalled three weeks ago with the 9 week moving average providing solid support to the lows of the week and this was duly confirmed in the last weeks with 2 wide spread up candles, the first of which failed marginally to break the 40 week moving average, with the second duly achieving this objective. Technically the index is now firmly above all three moving averages and with the 9 week about to cross the 40 week this is adding further to the short term bullish momentum. The resistance ahead now sits in the 79 to 81 price region and if this is breached then potentially we could see significant gains for the US dollar once again, particularly if the stream of good news stories concerning the US economy continues. This week, of course, rounds off with the monthly non farm payroll data and should these numbers reflect this potential positive news indicated by the ADP data due later then we could see the index break above the upper level of this resistance creating a great platform for a surge higher.

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