US Dollar Finally Breaking Out of Range

In addition to the US Dollar pairs we discussed earlier, let’s look at the DXY itself

Earlier today we discussed how AUD/USD and NZD/USD were melting down and the possibility that we may have to start paying attention to USD/CNH again.  But the US Dollar Index is having a breakout of its own against many of the G-10 currencies today.  Summarizing the day:

  • US Dollar: higher
  • Stocks: higher
  • Fixed Income: lower
  • Precious metals: lower

So why is the DXY higher?  It could be fear of Trump impeachment or that the trade deal with China won’t get done. It may be nervousness around a liquidity crisis, Brexit, or problems with European banks.   There is also the possibility that it may be due to US Dollar buying into month/quarter end on Monday.

So, in addition to the US Dollar pairs we discussed earlier, let’s look at the DXY itself.

As I had be discussing ad nauseum, the DXY had been in a trading range for the last 2 weeks. Today we finally broke out above 98.70 and are currently testing the highs from September 12th near 99.00.  This horizontal resistance also acts as the breakout level for an ascending triangle.  If price break above these levels, DXY could move all the way to 99.80, which is the top of the longer-term ascending channel, as well as the 127% retracement from the September 3rd highs to the September 13th lows.  US Dollar bulls will look to buy dips to support near 98.70.  Below that, trendline support comes in at the days lows of 98.36. 

Source: Tradingview, City Index


Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.