Earlier we discussed how AUD/USD and NZD/USD were melting down and the possibility that we may have to start paying attention to USD/CNH again. But the U.S. Dollar Index is having a breakout of its own against many of the G-10 currencies today. Summarizing the day:
So why is the DXY higher? It could be fear of Trump impeachment or that the trade deal with China won’t get done. It may be nervousness around a liquidity crisis, Brexit, or problems with European banks. There is also the possibility that it may be due to U.S. dollar buying into month/quarter end on Monday.
So, in addition to the U.S. dollar pairs discussed earlier, let’s look at the DXY itself.
As had been discussing ad nauseum, the DXY has been in a trading range for the last two weeks. Today we finally broke out above 98.70 and are currently testing the highs from September 12th near 99.00. This horizontal resistance also acts as the breakout level for an ascending triangle. If price breaks above these levels, DXY could move all the way to 99.80, which is the top of the longer-term ascending channel, as well as the 127% retracement from the September 3rd highs to the September 13th lows. U.S. dollar bulls will look to buy dips to support near 98.70. Below that, trendline support comes in at the days lows of 98.36.
