From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
Last week, we asked the question…is it time for a dollar bounce?
And the market quickly answered with a resounding, YES!
We’ve highlighted several currency pairs challenging crucial levels of support and resistance. Last week, we saw the USD take control at those key levels.
Both the EUR/USD and GBP/USD turned away from critical areas of former support turned resistance. The USD/CAD moved sharply higher from a major area of support. The AUD/USD broke back below a key retracement level after consolidating for the first half of the year. And the NZD/USD retreated from an area of overwhelming overhead supply.
King dollar is definitely back in the driver’s seat from a tactical viewpoint as we’ve seen a significant shift in favor of USD over the near term. But even the intermediate and long-term trends for most major FX pairs have flipped in the direction of the Dollar over the past month or so.
We’re watching closely to see if these new changes in trend are the real deal.
As such, we’re zooming in and scrutinizing each new piece of incoming data in order to gauge whether the recent bounce in the USD is likely to bleed through to longer timeframes.
With that as our backdrop, let’s jump into it and identify some key tactical levels in the Dollar Index $DXY for the weeks ahead.