Dollar Index Holds 50DMA Support As Relief Rally Looks Ready to Continue

The dollar index gained 0.75% on Friday as another phase of fears of Greece sent folks out the euro and into U.S. dollars. The 50-day moving average (DMA) has held as near-perfect support but Friday’s move has the shape of a bounce looking for follow-through.


Dollar bounces off the 50DMA support level
Dollar bounces off the 50DMA support level

*Charts created using TeleChart:

Follow-through from here, like a new high for the month, puts the 200DMA into play. Given the 200DMA held firmly with the failed double-test last November and January, I expect this resistance to hold again. I will be looking to accumulate more anti-dollar positions if this area gets tested.

Moreover, for this cycle, I expect dollar strength to translate into market weakness since the dollar is not rallying on good economic news.

Be careful out there!

Full disclosure: “marginally” net short the U.S. dollar, long SSO puts

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