The $USD charts only prints data at EOD. So, the analysis on the daily chart is based upon close last friday. Nonetheless, the chart is printing some early indication that the USD is recovering from a severe beating. While the economic data released last week may have been lackluster, there remains some fundamental uncertainties in Europe and Asia, which have dampened risk positions in the Forex market. Therefore, expect the greenback to benefit from the current reversal towards risk averse market sentiments.
Technically speaking, today's chart insert reads the following interpretation (See: "Tech-Note" below), supportive of a bullish reversal confirmation for the US Dollar index. A converse argument against the EURO Index ($XEU) can be made: Here, the RSI printed a BEARISH reversal confirmation precisely where price failed to rally above its BEARISH channel midline.
While these analyses are based on daily charts, further bullish confirmation of a continued bullish trend for the greenback will be best determined out of a weekly chart, where market consensus are the strongest. For now, such WEEKLY chart exists in the XEU itself, as well as the its relative strength (XEU vs. USD), where BEARISH technical events are still unfolding:
USD (Dollar index) - 1-Mo., DAILY Chart:
16 AUG 2010 - TECH-NOTE: 1 - RSI in positive spread; 2 - Price validated BULLISH channel; support above 61.8% Fib CAUTION: Significant resistance at 38.2% Fib BULLISH OUTLOOK.
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