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Technical Analysis of the US Dollar Index

Despite the recent drop in confidence, with the S&P 500 diving into its longest tumble since November, the US Dollar Index has been trading locked within the tight range 79.80 – 80.26 since 4th April. As the US policy makers strike an improved outlook for the world’s largest economy with the region getting on a more sustainable path, the greenback seems to continue to benefit from safe-haven flows. However, the lack of momentum to push back and trade sustainably above the 80 level casts a bearish outlook for the greenback. The market is hovering around the support level by 79.80 this morning as the bears seem to be back in town. With the MACD single line flipping below zero and the RSI hovering just above the 30 line on the hourly chart any upside looks likely to be limited. The negative outlook is further supported by the bearish alignment of the 20 EMA below the 50 EMA, while the market remains firmly below the 89 SMA. On the downside the market looks poised to test the 79.45 resistance level before diving into the 78 area. In the alternative scenario a break above the upper line of the channel by 80.00 could open the door for February’s high at 81.75.

Dafni Serdari
Market analyst
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