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Technical Analysis: US Dollar Index Bull Flag

by admin on February 2, 2010

dollar rally Technical Analysis: US Dollar Index Bull Flag

Drawing via The Reformed Broker

The U.S. dollar index has formed a bullish flag formation on the daily chart (see the image below). It also seems like the U.S. dollar index is kissing the 200 daily simple moving average goodbye for now. U.S. economic data is bidding the dollar higher as the dollar carry trade continues to unwind and fundamentals become more important in dictating currency direction.

usdx dollar bull flag thumb Technical Analysis: US Dollar Index Bull Flag

Click on image for full-sized Chart

Positive U.S. jobs data throughout the week would likely support this bullish U.S. dollar trend. According to Bloomberg, the jobs number consensus ranges from -40,000 to 75,00, with the market expecting a headline (median) number of zero job gain/loss.

Continued risk-aversion due to the sovereign debt problems in Europe would also continue to support the U.S. dollar. The ever-climbing spread on the Greek sovereign credit default swap suggests that the market is not expecting a successful resolution anytime soon.

greece credit default swap Technical Analysis: US Dollar Index Bull FlagThe positive U.S. dollar bias will likely stay the same unless the Greek debt problem is magically solved overnight or the Bank of England (or ECB) increases rates unexpectedly this week. All very unlikely to happen. The best strategy this week would probably be to sell any Euro/U.S. dollar rallies (especially if it is rejected at the 1.4000 level).

Technorati Tags: bull flag, Currency Trading, Forex Trading, sovereign risk, Technical Analysis, us dollar index

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US Dollar Pullback Scalping Greece Annoucement | My Investment Analysis
02.11.10 at 4:34 am

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