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.
