What is going on in the US Dollar Index?
US Dollar Index Daily Chart:
US Dollar Index confirmed uptrend in June, new intermediate term high at $74. Price continued to consolidate forming a base before breaking out above consolidation and 200d-MA.
Small retracement in form of bull flag continuation pattern. Achieved its target and formed a negative momentum divergence at upper Bollinger Band – odds increased for a retracement/reversal which is now underway. Is the correction in the USD caused by action in Gold or is it the other way around. None of my colleagues at various hedge funds can say for sure. The markets behavior is not familiar at all to anyone.
US Dollar Index Weekly Chart:
$76 index level appears to signal potential major support from confluence of 20 and 50wk EMAs, and positive moving average cross-over. Watch this area closely.
Momentum clearly has made new high; shifting now to bullish posture until further negation of recent action.
Fibonacci support:
32.8%: $76.94 (roughly $77.00)
50.0%: $75.92 (roughly $76.00)
61.8%: $74.90 (roughly $75.00)
Once again, the $76.00 Index level becomes a multi-correlated area of potentially strong support.
There is play here at the 76 level, thus gold and oil should continue to rally until Dollar tests $76 on the index.
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