U.S. Dollar Index Breaks Below Two Crucial Supports
Axiory | Jan 13, 2022 07:28AM ET
The US dollar eventually ended the two-month sideways trend that has been going on since the middle of November. As we expected in our yesterday’s analysis of the EUR/USD, it happened with the help of the CPI data. Yesterday, we talked about the EUR/USD. Today, let’s check the situation on the general dollar index.
Here, we had a pennant formation (green lines), which in theory should be a trend continuation pattern and promote the breakout to the upside. Reality hit this instrument differently, and the price broke its lower line. Thanks to the CPI print, that was the first crucial support to be broken.
Second one was the mid-term up trendline (blue), which was connecting higher lows since the end of May. Breaking those two should be enough to claim the bearish victory. I have one problem to give this victory away just like this and this problem is the horizontal support on the 94.6 (orange). As long as we stay above, dollar buyers can still have hope.
Yes, breakout of this line will be the end of the USD strength in the mid-term but as long as this line holds, we still cannot claim a total bearish victory.
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