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US Dollar Shows Signs Of Important Reversal

The US dollar moved lower against a basket of currencies yesterday, as the Japanese yen was the best performer Intraday.

Technical Analysis
Yesterday, the US dollar index moved sharply lower and headed towards the 100 simple moving average (SMA) – 4H where buyers just managed to hold the downside. The most important point was that the downside was stalled around the 50% Fibonacci retracement level of the last leg from the 86.90 low to 89.55 high. However, there is no doubt that the US dollar has come under severe pressure and pairs like USDJPY and USDCHF might have made a short term top. We need to see how it behaves during the coming sessions. There is a monster bullish trend line formed on the 4 hour chart of the dollar index which might act as the next support moving ahead. A break below the same might ignite a downside acceleration which could take it towards the 200 SMA (4H). The RSI also moved below the 50 level, which can be considered as a bearish sign.

If the US dollar index manages to climb back higher, then the 88.80-89.00 area might act as a resistance in the near term. Any further upside should be dependent on how the economic releases line up in the coming sessions.

Moving Ahead
There is hardly any market moving event lined up, which means we might witness ranging moves. The most important release this week in the US would be the retail sales report. The expectation is not on the higher side. So, if the outcome misses the mark, the US dollar might continue moving lower.

Wednesday, 10 Dec, 2014 / 6:00

Source : http://capitaltrustmarkets.com/us-dollar-shows-signs-important-reversal

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