The March U.S. Dollar index is called sideways-to-lower. Mixed currency markets are controlling the short-term direction of the index. This week’s Fed meeting and Friday’s U.S. jobs figures is also weighing on the trading action.
A stronger Australian Dollar is helping to pressure the dollar. Overnight the Aussie received a boost after the release of a survey showing Australian business confidence rebounded sharply in December. The New Zealand Dollar is also rallying on the heels of an improved trade balance. The Euro is trading slightly lower as profit-taking continues following last week’s surge. Euro Zone PMI data and the U.S. Non-Farm Payrolls report may be other reasons for the limited trading action.
The March U.S. Dollar Index continues to trade inside of a nicely formed triangle chart pattern. The uptrending support line is at 79.71. The down trending resistance line is at 79.99. The gradual compression of these two lines suggests impending volatility. Although some may prefer to trade the support and resistance, the better move will occur after the breakout.
Based on the short-term range of 79.40 to 80.27, a retracement zone was formed at 79.84 to 79.74. This zone has provided support for several days. Since the index is holding this area, there may be a buyers in there, but since the main trend is down, one has to conclude that there is a bias to the downside. ‘
Technically, the main trend won’t turn up until the swing top at 80.27 is violated, however, a breakout above the downtrending angle at 79.99 will be a strong sign that sentiment is shifting.