The US dollar remains strong and the current 7-day rally is attempting to break above the 50-day SMA. Last week, the dollar finished higher as Fed Chair Janet Yellen said that the Fed-funds target rate will be slightly higher this year.
The greenback advance however could be short-lived if we start seeing continuing weaker US economic data. Today’s Durable Goods and Consumer Confidence news releases will be important to watch.
The dollar index daily chart shown above highlights the partial recovery from the bullish butterfly pattern could be poised to take price to fresh 2015 highs. The past two months have provided a clear range that has the psychological 100 handle serving as critical resistance. Any pullback or profit-taking could see key support come from the bullish trendline shown in green. A daily close below that line could see weakness target the 93.00 region.
To the upside, 102.20 will be first initial target. If US economic data does not slowdown, that target could be upgraded to 104.66.
The trade: Buy Dollar Index at 96.75 with a stop loss at 95.08 and a take profit at 101.75. The Risk/Reward Ratio is 1:3.
Edward J. Moya
WorldWideMarkets Online Trading