U.S. DOLLAR INDEX

Multi-year low volatility reading on the U.S. dollar index suggests strong directional movement in the following weeks/months. U.S. dollar index tested the strong support level for the 5th time over the past two years and a breakdown below this support level at 79.5 could push the U.S. dollar index towards 75 levels. Unless we see another rebound from the strong support in the following weeks, we will favor a bearish scenario for the U.S. dollar. Low volatility is something we should keep an eye on. Previous breakouts from such low volatility readings resulted in sharp price swings.