10/27 - EUR/USD eyes wedge/key MA

10/26 - DXY rebounds above the 10-day MA

10/21 - DXY rejects at key moving average

The US Dollar Index failed once again at the key 10-day MA. This allowed the EUR/USD to advance above the 1.50 threshold and now possibly sets the stage for further weakness in the Greenback. The absence of weekly divergence and lack of substantial resistance leave room for the EUR/USD to advance towards the 1.52 region, unless risk aversion reappears as it did in the final hour of North American trade Wednesday. Either way, the 10-day MA has become the proverbial line in the sand for the DXY & EUR/USD. All market participants should keep a careful eye on these key moving averages to determine whether a pullback could materialize into a more meaningful correction.

DXY maintains key support

The US Dollar Index maintains wedge trendline support and a key Fibonacci retracement (78.6% of July 08 to March 09 range) remains in place despite failing to overcome the 10-day MA & the 76 handle (former pivot support turned resistance). Meanwhile, the EUR/USD retreated after failing to breach the coveted 1.50 barrier, highlighting 4-hourly bearish MACD, RSI & Stochastics divergence. More importantly, Tuesday's reaction low has highlighted a short-term rising wedge, while 4-hourly RSI has formed a Head & Shoulders pattern. A break below wedge support & the 10-day MA (under the 1.49 region) together with a loss of RSI neckline support near 50, could suggest a deeper retreat towards the 35-day EMA (near 1.4750). A 4-hour close above 1.50, however, will negate the wedge scenario and could trigger a parabolic move up towards 1.52.

10/19 - DXY fails at former pivot & 10-day MA

10/16 - MISSED SELL ENTRY POINT

10/15 - DXY maintains wedge support, key Fib

The US Dollar Index continues to maintain support at a wedge trendline and at a key Fibonacci retracement (78.6% of July 08 to March 09 range) just below 75.50. A strong close (for Friday) is now necessary to round-up daily RSI & MACD to confirm bullish divergence. The resistant 10-day MA will be the key test to determine whether the Greenback can recover. Failure to reclaim this fast, yet important moving average will likely leave the DXY susceptible to a capitulation-type sell-off. The EUR/USD is in a similar position. Recent strength is now probing a wedge trendline at similar resistance levels seen two years ago during the last bull campaign. Below rising 10-day MA support will confirm bearish divergence and signal a broader correction.

While it may be premature to buy the Greenback, bearish price-action in Gold and the Loonie are reasons alone for a possible reversal.

10/13 - DXY fails at key moving average, eyes wedge bottom

10/09 - CHART OF THE WEEK

10/08 - DXY probes key support near the 76 handle

The US Dollar Index retested key support just below the 76 handle. While this pivot managed to support once again, time is running out for the Greenback. A positive daily close is required for Friday to round-up daily MACD and complete bullish divergence. The next level of support is in the 76.50 region, where projected falling wedge trendline & a Fibonacci projection reside. The EUR/USD surpassed the 78.6% Fibonacci retracement at 1.4768, but failed to retest the yearly high. Beyond 1.4847 (2009 high) is 1.4914, where projected rising wedge resistance & a weekly pivot lie. Meanwhile, spot Gold continues to extend to record highs. While daily RSI is at extreme overbought conditions (80), there is no divergence yet. Thus, dips should be accumulated until daily studies display bearish divergence.

10/06 - DXY down as Gold surges to fresh record highs

Spot Gold broke-out of a 3-week triangle to begin the week, triggering Tuesday's fresh record high. The pattern break-out projects a move to the 1050 region, where extreme overbought RSI levels could delay further upside potential . In the meantime, oversold (hourly/4-hourly studies) dips below the previous record high (1033) should be accumulated. Meanwhile, the US Dollar Index, which rejected at the 35-day exponential moving average last week, fell below the 10-day MA. A retest of the 76 handle (September 2008 & 2009 pivot) is now more than likely, unless the DXY can somehow reclaim the 10-day MA (now at 76.70). The EUR/USD has rebounded from last week's oversold RSI base and has surged through the formerly resistant 10-day MA. A key Fibonacci retracement at 1.4768 (78.6% of latest downleg) is the only viable resistance level ahead of the yearly high at 1.4847. The reaction at 1.4847 or 76.00 DXY will be the critical factor in determining whether the Greenback is amidst a potential bottoming process or merely beginning another bear campaign.

10/02 - Chart of the week

10/01 - Dollar set to test key moving average

The US Dollar Index benefitted on Thursday from renewed risk aversion. The commodity currencies suffered the most as the DXY managed to rebound off the 10-day MA. The EUR/USD rejected at its 10-day MA as well, hinting at a possible shift in trend. The next key technical event to watch will be whether the USD can clear the resistant 35-day exponential MA and if the EUR/USD can sustainably break below the 50-day MA (now at 1.4423). If these moving averages are breached, a broader correction should ensue. In the event of a reversal in risk appetite, clearing the 10-day MA (expected to be near 1.4630 at the time of the payrolls number) should reinvigorate dollar bears towards recent lows.