Despite the recent short term rally for the US dollar which managed to climb on the usd index from a low of 76.88 to a high of 78.37, the overall picture still remains bearish for several reasons: firstly, of course, we have the double top in the 81.35 region which combined with the 200 day moving average at 81.35 presents a formidable resistance level for the index which may prove insurmountable in due course. Secondly, the recent retracement of the low of 2 Feb failed to breach the 38.2 fib level at 78.54 suggesting that this move to the upside may have already petered out. Third the high of Monday at 78.35 also coincides with a failure at this price point on Jan 31 also suggesting weakness at this level. Finally, of course, we are still trading well below both the 9 and 40 day moving averages and with the spreads of the candles for the last 4 days now narrowing a period of consolidation now seems increasingly likely.
With little fundamental news on the horizon either or tomorrow, it seems increasingly likely that something will have to be manufactured in order to move prices significantly. We have to remember that the forex market is there for traders to make money and no one eats when prices are in consolidation!!