The US Dollar Index $DXY_us.
The strong advance on the US Dollar Index continues. Now that the index has reached its current target of 79, expect retracement to test the new support level at 76. Respect of support would confirm the primary up-trend and offer a target of 84* for the next advance. A trough above zero on 63-day Momentum would strengthen the signal.
* Target calculation: 80 + ( 80 – 76 ) = 84
The euro is testing short-term support against the greenback at $1.35/1.34. 63-Day Momentum (declining below zero) reminds we are in a primary down-trend. Failure of support would signal a decline to $1.30*.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
The dollar has benefited from safe haven demand, commencing a primary advance as the euro falls. 63-Day Twiggs Momentum crossed to above zero, confirming the primary up-trend. Further retracement to test the new support level at 76.00 is likely, but respect would demonstrate strong buying support.
* Target calculation: 76 + ( 76 – 73 ) = 79
The US Dollar Index surged after the latest FOMC statement avoided any mention of additional purchases of Treasuries or mortgage-backed securities (MBS). Though they did leave the door ajar with their concluding paragraph:
………The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate.
The index respected the new support level at 76.00, confirming a primary advance to 79* — the start of a primary up-trend. 63-Day Twiggs Momentum crossed to above zero, further strengthening the primary trend signal; a large trough that respects the zero line would provide final confirmation.
* Target calculation: 76 + ( 76 – 73 ) = 79
As the stock market moves down into the next daily cycle low and the selling pressure intensifies, this should drive the dollar index much higher. It remains to be seen if gold can reverse this pattern of weakness in the face of dollar strength, especially since the dollar will almost certainly be rallying violently during the intense selling pressure that is coming in the stock market.
via The Next Selling Wave Is About to Begin | Toby Connor | Safehaven.com.
When the dollar strengthens, gold normally falls. Except in times of high uncertainty (like the present), when demand for gold as a safe haven overcomes downward pressure from a stronger dollar. Buying gold at current prices is a bet that either Greece will default — a pretty safe bet — or that the Fed is again forced to use its printing press (not quite as certain).
The weekly chart of the US Dollar Index ($DXY) shows retracement to test the new support level at 76.00 after the recent breakout. Respect of support would confirm the breakout and reversal to a primary up-trend. Failure would warn of a bear trap. Reversal of 63-day Momentum below zero would also indicate continuation of the primary down-trend. A lot depends on the outcome of this week’s FOMC meeting.
* Target calculation: 76 + ( 76 – 73 ) = 79
The falling euro strengthens the US Dollar Index which broke through resistance at 76.00. Breakout completes the base which has been forming over the past 5 months. Retracement is likely; and respect of the new support level at 76.00 would confirm a primary up-trend, while failure would warn of a bull trap.
* Target calculation: 76 + ( 76 – 73 ) = 79
The Dollar Index rallied strongly but expect stubborn resistance between 76.00 and 76.50. Consolidation between 73.00 and 76.50 has continued for more than four months, but we are in a bear trend and downward breakout remains likely. Failure of support at 73.00 would offer a target of 70.00*. Any hint of quantitative easing in the next FOMC announcement, on September 21st, would accelerate the sell-off.
* Target calculation: 73 – ( 76 – 73 ) = 70
The Dollar Index continues to test the band of support at 73.00 to 73.50. The recent failed up-swing (it did not reach 76.00) suggests selling pressure. 63-Day Twiggs Momentum oscillating below zero indicates a strong down-trend. Breakout below 73.00 would offer a medium-term target of 70.00*.
* Target calculation: 73 – ( 76 – 73 ) = 70
The Dollar Index is testing primary support at 73.00. Penetration of the declining long-term trendline is only tentative at this stage and failure of support would warn of a down-swing to 70.00*. Announcement of QE3 by the Fed on Friday would cause a sharp fall, while absence of further easing would strengthen support.
* Target calculation: 73 – ( 76 – 73 ) = 70
The Dollar Index has consolidated between 73 and 76.50 for the last 3 months. The recent failed swing, a rally that did not reach 76, indicates weakness and we are now likely to see a test of support at 73. In the long term, with 63-day Twiggs Momentum oscillating below zero, the primary down-trend is likely to continue. Failure of support would offer a target of 70*.
* Target calculation: 73 – ( 76 – 73 ) = 70
