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U.S. Dollar Surging

February 25th, 2013
in contributors, forex

Dollar Index Analysis – Week Of 25th February 2013 – Technical Update

by Nick Simpson, Forex-FX-4X

  • The dollar index has hit its strongest level in five months, trading around previous resistance in the USDX 81.50 area, following the Fed policy meeting minutes on Wednesday.
  • Divergent views on QE by the Fed policy makers has seen the US dollar gain across the board.   There has been speculation that the Fed could potentially end the monetary easing programme sooner than previously anticipated
  • We will be monitoring the price action in this USDX 81.50 area, which coincides with the 50% retrace of the last leg lower from July – September, for a near to mid term directional bias.

Follow up:

  • A corrective pullback from range resistance would see the 80.70 area as a potential support focus.  This area acted as resistance from late November, prior to the recent dollar rally.
  • Large speculators from the CME (Chicago Mercantile Exchange) have cut anti-USD wagers by around 88% in the latest reporting period, to hit a net $630 million aggregate position, according to the latest COT report update from the Commodity Futures Trading Commission (CFTC).
  • In related analysis we note that the benchmark S&P 500 index closed Friday near the intra-day high at 1515.26 and +0.85% for the day – but experienced the first weekly basis drop of the year.  Gold had triggered the so called bearish “death cross,” formation earlier in the week but pared back some of the earlier losses to close around the $1575 mark.
  • The key EURUSD pair, with a 57.6% USDX weighting, has closed the week just above the 1.3150 area.  This area has been a major pivot for EURUSD over recent months.

Dollar Index Analysis.

Click to enlarge

 









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