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5 Aug 2013
DXY treading water after being rejected at 82.42 resistance Friday
FXstreet.com (Barcelona) - The US Dollar Index (DXY) turned sharply lower Friday after threatening to break above 82.42 resistance. Technicians still point to 80.71 as possible downside target for the DXY.
DXY heading lower may be path of max frustration for traders
Many analysts and traders have been calling for a secular bull market in the DXY to commence / resume under the theory that the US Federal Reserve is going to lose control of interest rates sooner than later as the US economy improves and all of the QE / stimulus stokes inflation. That theory seems to run into problems every time it attempts to gather some momentum in the form of a rising DXY. This time around, a better-than-expected ISM Manufacturing number and lower weekly jobless claims Thursday stoked the DXY higher so that it was threatening to break above short-term resistance at 82.42. However, a tepid non-farm payroll number Friday acted as water to the DXY’s upside fire and the previous downward track was re-established.
Technical outlook for the DXY
Technicians say that although 81.63 was a logical point for a bounce attempt to occur (which it did), the likely stopping point for the macro move lower in DXY remains 80.71 – the Fibonacci projection for the macro downside correction. Below 81.63, there may be some additional support at 81.13 and then finally at 80.71. Resistance for DXY comes in at the 7/24 peak at 82.42 and is backed up by the 7/18 close at 82.82.
DXY heading lower may be path of max frustration for traders
Many analysts and traders have been calling for a secular bull market in the DXY to commence / resume under the theory that the US Federal Reserve is going to lose control of interest rates sooner than later as the US economy improves and all of the QE / stimulus stokes inflation. That theory seems to run into problems every time it attempts to gather some momentum in the form of a rising DXY. This time around, a better-than-expected ISM Manufacturing number and lower weekly jobless claims Thursday stoked the DXY higher so that it was threatening to break above short-term resistance at 82.42. However, a tepid non-farm payroll number Friday acted as water to the DXY’s upside fire and the previous downward track was re-established.
Technical outlook for the DXY
Technicians say that although 81.63 was a logical point for a bounce attempt to occur (which it did), the likely stopping point for the macro move lower in DXY remains 80.71 – the Fibonacci projection for the macro downside correction. Below 81.63, there may be some additional support at 81.13 and then finally at 80.71. Resistance for DXY comes in at the 7/24 peak at 82.42 and is backed up by the 7/18 close at 82.82.