On this week last year, the US Dollar Index kicked off a rally that gained 25% in 8 short months. Since the peak at just over 100 in March of this year, the Dollar Index has been in a consolidation and oscillating in the mid-90’s. But that could be getting ready to change.
The push higher into July tested the primary zone of resistance at 97.18 – 98.56. The pullback found eager buyers at the nearby high-volume area support zone beginning at 95.58. The rally from this support is now testing the upper boundary of the resistance zone, near 98.56.
If the Dollar Index is able to break above 98.56, this will shift the rotational bias that has been in effect since mid-March back to a bullish bias. A move over 98.56 would first target another test of the highs just above 100.
A move over the March and April highs would be a strong signal that a new leg higher in a larger degree uptrend is underway. And while the support zone 94.58 – 95.58 remains intact, it would seem only a matter of time before the dollar gets back on the rally track.
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