The March U.S. Dollar Index is under pressure this morning in a volatile, active session. The selling pressure is in reaction to the surprise news that the Bank of Japan is going to adopt an open-ended commitment to buy assets next year. Also underpinning the Yen is the news that the BOJ doubled its inflation target to 2 percent. The Australian Dollar and New Zealand Dollar are also soaring on the news.
A stronger Euro is also pressuring the dollar. News that the German ZEW Survey for Economic Sentiment beat expectations by rising to 31.5 is fueling the rally. Analysts are saying that this news may encourage Bundesbank to revise its GDP outlook.
Technically, the U.S. Dollar Index ran into resistance as it approached a major 50% level at 80.20. The failure to overcome Gann angles at 80.16 and 80.25 also led to renewed selling pressure. With nowhere to go but down, the index dropped quickly into an uptrending Gann angle at 79.78. If downside momentum continues, then this angle should fail, leading to a test of 79.59.
Additionally, the new short-term range is 79.40 to 80.27. The retracement zone of this range is 79.84 to 79.74. The index is currently testing this zone. Buyers may step up inside this zone in an effort to form a potentially bullish secondary higher bottom. A successful test of this retracement area could trigger a shift in sentiment later today. Day traders should pay close attention to the activity inside 79.84 to 79.74.