The US Dollar Index started to show signs of improvement as key levels held and bullish MACD divergence signals began to materialize. Thursday's morning reaffirmation of New Zealand's credit rating eased risk aversion, causing the Greenback to reject at the 10-day MA once again. The successful 7-year auction reversed sentiment on Wall Street enabling risk appetite to flourish. The follow-through in Asian trade allowed the EUR/USD to clear a corrective trendline, causing the dollar to collapse to fresh lows.
As mentioned before, a failure at a fast moving average (such as the 10-day MA) and a quick retracement to new lows indicate that the DXY (US Dollar Index) is still in a dangerous mode of capitulation. Although, daily studies remain oversold, generally a selling climax is required to exhaust the selling pressure. In the meantime, until the 10-day MA is cleanly broken, levels to watch are: 78.89-99 (projection cluster), 77.69-89 (fibonacci retracement/December 2008 low) and 74.70-79 (fibonacci cluster).
As mentioned before, a failure at a fast moving average (such as the 10-day MA) and a quick retracement to new lows indicate that the DXY (US Dollar Index) is still in a dangerous mode of capitulation. Although, daily studies remain oversold, generally a selling climax is required to exhaust the selling pressure. In the meantime, until the 10-day MA is cleanly broken, levels to watch are: 78.89-99 (projection cluster), 77.69-89 (fibonacci retracement/December 2008 low) and 74.70-79 (fibonacci cluster).
