Introduction:
The Dollar index will have to slide down if it breaks the major support level. Seeing all the improvements in the global economy, this was going to happen and many foresaw it. The dollar index has come down to 78.5 after breaking the crucial support level of 80. This was on the back of improvement in the United States data and good cues from Europe as well. The United States markets have also rallied nearly 3 – 4 % this past week. And most of the world economies are in a short term up trend, which is bad news for the Dollar index. If this continues and the Greek debt crisis tends to slow down, then the Dollar index would see lower levels.
Factors Affecting:
The factors affecting this breakdown on some good volumes, is the improvement in the global economy and some depreciation of the dollar against currency of some major economies. As said, the earnings season will play a major impact in this market and also will decide the move of the dollar index. There were some strong earnings by some blue chip companies in the United States and analysts feel that this will lead to a new shorter term uptrend.
Technical Analysis:
In the chart below, the index has fallen below the crucial and important level, i.e, 80. This level has been acting as a good support in the medium term. As this was a major resistance for the Dollar index to break on the upside, many analysts would have assumed that this index will find very difficult to break the 80 mark on the downside. So, to confirm this break down, we need to see whether the index will continue to remain in this range or below 80 for quite some time.
Forecast:
Medium term traders who were long in the index would hold on to their positions and see whether the Dollar is clinging back above the 80 mark. Short term traders would rather wait for all this drama and the earnings season to complete and then have a fresh call on the Dollar index. The longer term trend is still up, so the long term traders wouldn’t have to worry about this fall. The Greek debt problems has got legs to come back in to the markets and we shall see some handsome returns if those problems come back.
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Disclaimer:
THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER.
