U.S. DOLLAR INDEX & EUR/USD

Rebound in Euro and weakness in U.S. dollar has now reached to the targets I’ve mentioned in my previous update on the 22nd of January.

(http://techcharts.wordpress.com/2012/01/22/u-s-dollar-index-eurusd/)

EUR/USD rebounded from 1.26 levels and reached 1.33 levels. U.S. dollar index reversed from 81.60 levels and pulled back towards the support area between 78 and 80 levels. Since the beginning of 2011, EUR/USD is making lower lows and lower highs (downtrend) and US dollar index vice versa (uptrend). U.S. dollar index reached its 200 day moving average over the past 4 week’s correction and RSI (14) got close to 50 levels. Both technical action on RSI and around the long-term moving average suggest that the uptrend is still intact on the dollar index. 4 week-long correction has now reached its lower limits and for the positive trend in dollar to continue we should see the greenback firming at these levels.

For the U.S. dollar index the 200 day moving average is now at 78 levels. Price should stay above 78 to resume its uptrend. EUR/USD found resistance at 1.33 levels and weakened towards 1.3150 on the last day of the week. Price should stay below 1.33 level on a weekly closing basis for the weak technical outlook on EUR/USD to continue.

A break below 78 levels on the U.S. dollar index and a weekly closing above 1.33 levels on the EUR/USD will put the bullish outlook on the dollar index and the bearish outlook on the EUR/USD into question.