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USD Index 4 May 2010

Following the recent sideways consolidation between 80 and 82 on the daily chart, the USD index has finally broken out today surging higher and breaking above 83 as a result with a widespread up candle.  This breakout follows the recent upwards trend of the past two weeks which has seen excellent support from the 9 day moving average with any short term pullback finding a cushion from this technical indicator.  Today’s break higher simply confirms the short term bullish picture and we can now expect to see further dollar strength as a result with the deep price congestion below now providing a solid platform of support.  The weekly chart confirms this picture with the 9 week moving average providing solid support to the move and the key for the longer term will now be whether the deep resistance between 84 and 88 is sufficient to cap this current recovery.  Should we break out above the 88 top then expect to see the dollar surge even higher as a result.

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