Trend following the US Dollar Index (DXY) for the past few months have been overshadowed by the Euro crisis. While its been more of the EURO's fundamental weakness rather than the strength of the US Dollar; the underlying support from the technicals of the USDx shows the reliability of the trend on the chart formation as descride herein.
From the Pivotal price point of 80.09 which served as the major support for the USDx on its corrective movements has held very well. That has been our basis of price reference since February. The consolidation period which also helped the gradual decline of the EURUSD from a 1.3485 high ( Feb 26, 12) to its current levels of 1.2102 as of this writing. Although, the price equilibrium levels of the current EURUSD is quite a stretch of its extension. What this means is that the equivalent price level for the USDx is misaligned compared to the present Euro price. Whereas the 83.65 basis point current working price of the DXY spot would continue to move higher especially with an opening gap for the 1st trading day of this week. Pushing the EURO lower and with a spill-over for the EURGBP cross rates at 0.7770 have placed more selling pressure in the marketplace. The strong correlation between these three major currency pairs have played well while investors have shifted attention towards the Japanese Yen crosses and unloading some Aussie and Kiwi positions at the end of the previous week.
Support & Resistance levels:
DXY = 81.20, 83.05 Support / Resistance 84.70, 85.05/10
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