The US dollar index posted the first bullish candle yesterday after 6 previous bearish candles and a weekly bearish engulfing candle (see weekly chart below).
This daily bullish candle came as liquidity returned to the markets and on the back of Moody’s downgrade of Portugal’s credit rating. The downgrade is the latest in the series of news referring to the Euro debt issues. The EUR/USD failure to hold above trend line resistance and key 1.4500 level came after this news hit the market and has subsequently driven the dollar index.
A small correction is possibly overdue and risk sentiment combined with US data this week will determine whether this move has legs. The Non Farm payroll figure on friday is the key event risk this week.
Please see further Forex Dollar Index and currency analysis.
Dollar Index Weekly Chart
