This week’s Chart of the Week features DXY (U.S. Dollar Index) after a volatile week due to the Fed’s interest rate hike on Wednesday and more updates about the status of Trump’s tax reform. We saw a significant move higher for DXY in the weeks leading up to the Fed meeting due to the widely spread expectations of an interest rate hike. However, we saw DXY fall from $94.18 to $93.35 following the announcement. This is something that we have seen before, markets become overly hawkish and buy the Dollar, only to sell it going out of the meeting. When looking at the technical picture, it appears that DXY is ready to erase some of its recent losses. We see the trendline that began in January at $103.83 being tested at current levels ($93.95) and we expect resistance to hold as it has the previous four times. The $93.95 level also happens to be the 50 day moving average which adds to the case for a reversal. To the downside, we look to test the top end of the channel DXY traded in August and September at $92.85, and the bottom end of the channel at $91.55 is our ultimate target on this trade.
Farewell and Trade Well,
Founder and Editor-in-Chief