Following on from my recent post about the US dollar, in which I suggested that perhaps the second half of the year would be better for the greenback, in the last few days this has certainly been the case. And today’s price action on the DXY seems to bear this out.
From a technical perspective the 80 level appears to be holding firm as the USD index moves towards a test of the 81 region and any move through here should see the 81.53 high of January tested and regained in due course.
This resurgence in the US dollar is now starting to be reflected in some of the majors, not least of all the eurodollar and for a better perspective of this the weekly chart of the eur/usd tells its own story.
As we can see the various levels of support and resistance, and their relative strength or otherwise, are clearly marked. To the upside, the strongest resistance is now in place immediately above the 1.40 price point. Below, and now about to be tested, is a deep platform of support between 1.34 and 1.3430. If this is breached then the next level comes into play at 1.3220, followed by 1.30, and ultimately 1.2790. Finally euro bears now have something to celebrate, helped by the change in sentiment towards the US dollar, and should the 1.34 level break then expect to see further downside pressure on the pair.
By Anna Coulling