For the past several months, the USDX have been quite resilient and providing a positive tone for the US Dollar's value. It has been holding up and stable for it has been selected by most investors to hold while the stock market still tries its best to recover from its downturn, Significantly, the stocks have made some head way from the start of the year with better than expected numbers for the economy. yet the unemployment figures still bears the negative effects as it climbs to its higher levels.
There now exists a possibility that the USDX which closed below the 80.00 is showing that a probability of a downturn may prove to be in the limelight. Although, price re-alignments can be seen this third quarter of the year as expectations for a continuation for the GBP/USD and the EUR/USD to still gain their strength although at a slower pace than previously made. The persistent bias still remains as prices made some newer highs from the previous week ending the 17th of July 2009.
As we approach the end of the 1st month of the 3rd quarter; whenever the USDX remains at this lower levels, the continuation of the GBP and EUR vs. the US dollar will strengthen as the legs established by these two major pairs are becoming more stable than it was earlier expected. The wider swings are becoming frequent as many traders have obviously been stopped at their trigger points of stoploss orders. We would not be surprise to see a strong reaction towrds the end of the month of July towards the first week of August.
On the technical side of it, the lower penetration of the USDX from the triangle formation as shown on the chart; already provides a signal that a downturn will probably be starting. However, any first penetration normally gives traders a chance to change existing positions giving way for a correction before it moves down. If and when this happens then this quarter may also signify a correction downwards for the dollar.
Good Luck and Happy Trading!
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