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.
*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