U.S. Dollar Index: Technical Analysis
June 29th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
The U.S. Dollar Index has been meandering higher, but Friday’s close represented a break down and out of the recent, uptrending channel. Well, it depends on how you draw the channel. It might still be in a longer term channel, but it’s clearly retesting recent lows. The 71.90 area has a couple of supports running through it.
There are several supports down here, but if the European Central Bank does raise rates on July 3rd, that could cause [more] trouble for the dollar. That maybe break below the channel could be insiders positioning themselves ahead of the news.
The Fed has backed itself into a corner. If it raises rates, it crashes the already declining stock market and who knows how many banks. If it cuts, Americans will be burning their dollars to stay warm this winter.
Here’s the USDX daily chart. It shows the channel break down and various supports.
I’ve been short the dollar for months with UDN and I’m holding, for now, despite the supports ahead.
