Dollar Index Technical Analysis – WC 9th July

The dollar index gained 2.1% on the weekly basis and put in its best performance since December. USDX is now trading at a five week high; this comes after the index once again found a bid at the previous resistance level, which subsequently became support, around 81.50.
A break of 83.55 would see the USDX hit a level last seen two years ago. Price is only 25 pips lower than this level at the market close 7/7/2012.
The dollar strength scenario did push the EUR/USD pair to the lowest level seen in two years on Friday. The heavily weighted euro dropped 3.1% last week — the biggest weekly decline since September.
The 61.8% retrace of the November 2008 to May 2011 downside move is located just above this two year high at USDX 84.17. This level has potential to provide resistance but would be coming after a bullish breakout above long term resistance – a constructive technical development.

Dollar Index Weekly Chart

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