USD Index Chart 1 Sep 2010
The usd index continues to consolidate sideways in a narrow range oscillating between 82 to the downside and 83.50 to the upside. This region has now become extremely congested following August’s price action which was largely confined to this price area and the longer term outlook for the usd index will now be dictated by two technical factors. First for any continuation of the recent bullish momentum initiated early in August, we now need to see a breakout to the upside with a breach of the 83.56 high which should then provide the requisite platform of support for a sustained recovery in the medium term. However, to the downside we are now re-testing the 40 day moving average and any breach of this, either today or in the next few days, could signal a test of the 200 day moving average in due course. Should this fail to hold then we could witness a break below the 80 region with August’s rally merely seen as a short term pause in the longer term bearish trend.
