US Dollar Index: Can the selling momentum continue?
The US Dollar has been dealt a hefty blow in the past week, diving into four month lows on Friday, as the disappointing Non farm Payroll figure sent the market at the 80.00 area, where it is currently trading. With the Fed’s rate decision scheduled on Thursday, it looks like this is a make or break week for the greenback. With a large scale easing program widely expected and extensively priced in, it is clear that the market has high expectations from the Fed both in terms of scope and influence. Considering the S&P 500 four year high, gold’s surge above 1700 and dollar sharp tumble to multi-month lows it appears that meeting expectations is difficult enough, whereas beating them could be near impossible, opening the door for disappointment, sharp selling of risky assets and a sizable rally for the dollar. The technical set up reinforces the idea that the bears could be running out of breath. The MACD signal line, which has been trading steeply downwards below the signal line since the beginning of the month on the 4-hour-chart, is now turning flat, indicating that the downtrend may be losing its momentum. With the RSI in the oversold area, the market could be poised for a turn upwards. Key levels for the bulls to watch come at 81.71 and 82.93.
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