USDX Dollar Index Update
- The dollar continues to drop despite the issues in the Eurozone periphery as the prevailing market sentiment appears to have little effect on the underlying price action.
- Our dollar index update analysis last week noted “a further corrective move lower could potentially be seen as the long upside shadow on Thursdays candle, coming at a confluent technical area, has the look of a swing point”. This has played out as expected and price is now testing the confluence support area of 38.2% and 50% retrace levels.
- A further move lower will need to contend with the next technical area around 77.90 which has a price pivot zone and FE61.8 Fibonacci extension. Any move below current levels would add weight to the idea of 80.11 being a price action lower high.
- Further to this the 77.35 area has 61.8% and 50% retrace confluence with the 200 day SMA approaching this level and providing an additional technical reference should price trade to this area.
- Initial resistance could potentially be seen at the daily lows from 20/21st Feb which are around the 78.80 – 78.89 area.
- Further to this we see 79.37 and the 80.00 psychological round number as near to medium term reference areas. Upside Fibonacci levels will be added after price forms a swing low.
- Speculators had hardly changed their positioning on the heavily weighted EUR FX (CME), CFTC COT report data from the 21st Feb period has revealed. The net contracts were down just 4% from the previous week which represents a net 142,159 short contracts as opposed to 148,641 on the 14th Feb; a slight decline in bearish wagers nonetheless.
USDX Daily Chart