Much has been written about the strong rally in the US Dollar. However, in the past 5 months, USD Index has been consolidating, with support at the horizontal line at 93. The following technical indicators are showing weakness:
The weekly MACD has crossed below the MACD Signal Line but remains in the positive territory.
The -DMI is rising and has crossed above the +DMI. While ADX has yet to hook up, its sharp decline has stopped and is now poised to swing upward.
If USD Index were to break below the 93 mark, we could be seeing a bearish reversal. In my mind, this may come when FOMC decides to defer the much-anticipated interest rate hike this month.
Chart: USD Index's weekly chart as at Sept 7, 2015 (Source: Stockcharts.com)
Hi Alex, did this mean that RM/USD will go up too? Thanks from FooCH
ReplyDeleteHi East Point Trading
ReplyDeleteUSD Index is an index of the value of the United States dollar relative to a basket of US trade partners' currencies. Since US is the biggest economy & trades with the rest of the world, the USD Index is an indication of the USD strength/weakness.
A top in USD will normally lead to a decline in USD vis-a-vis other currencies. However, it may not necessarily drop against all currencies since some currencies are having issues of their own. One such currency is our MYR.
Nonetheless, our MYR has dropped so much that it may stage a rebound from its deeply oversold position now.