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Talking Points:
- US Dollar Technical Strategy: Holding Long via Mirror Trader Basket **
- Support: 10576 (23.6% Fib ret.), 10542 (trend line from Sep’12), 10520 (Feb 17 low)
- Resistance: 10610 (38.2% Fib ret.), 10638 (50% Fib ret.)
The Dow Jones FXCM US Dollar Index edged higher after showing a Hammer candlestick above support at a rising trend line set from September 2012. Prices are correcting slightly lower after securing finish last week with the best performance since late October. A daily close above the 38.2% Fibonacci retracement at 10610 exposes the 50% level at 10638. Alternatively, a reversal back below the 23.6% Fib at 10576 targets the trend line (now at 10543) anew, followed by the February 17 low at 10520.
The greenback’s performance last week suggests the shift in the fundamental backdrop we discussed earlier may be materializing. We remain long the US Dollar via the Mirror Trader US Dollar currency basket. **
Daily Chart – Created Using FXCM Marketscope 2.0
** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.
— Written by Ilya Spivak, Currency Strategist for DailyFX.com