US Dollar Starts to Bounce Yet Still Has Some Work to Do
The dollar should still move higher in the near term. Here is how that might happen, says Mike Golembesky, an Elliott Wave analyst covering U.S. indexes, volatility instruments, and forex.
The U.S. dollar Index (DXY) hit a low of 92.55 last week and has since moved up just about 1% off of that low. While not a huge gain from a percentage point of view, given the dollar’s fairly deep fall since the January highs this is a relatively significant move up off the lows. Furthermore, the structure up off of this 92.55 low suggests that the dollar should still move higher in the near term.
There are still several price resistance levels that the DXY needs to break to signal that this move is something other than just a short term corrective bounce. Given where we are in the pattern we may not have an answer to this question for several months. The structure of the move up off of the lows and the overhead resistance levels should help give further guidance.
Last week I discussed the composition of the DXY. In particular, how heavily weighted it was towards the European currency pairs.
The euro/US dollar (EUR/USD) currency pair has a very overweight position in the DXY making up 58% of the index itself.