Consolidation Breakout: US Dollar Index Analysis

USDX Analysis

-US dollar index has moved above the descending trend line after the key 73.50 area support held on three consecutive attempts to break lower.

-Near to mid term bias is now to the upside following this consolidation break.

-A move under this 73.50 support level would be required to change this bias and would see the 72.70 area back into focus for USDX bears.

-Resistance observed around the 75.00 level which has price structure and 50% retrace confluence from the 76.71 > 73.41 bullish wave higher.

-The daily swing high from 5/8/11 is aligned with the 75.44 area 61.8% retrace of 76.71 > 73.40 which may act as resistance on any break of 75.00.

-75.96 is a level associated with multiple previous candle high points and the last key resistance pre 76.71 which is the 12/7/11 swing high.

-US ISM Non-Manufacturing due this week - good data may help risk appetite flows; safe haven buying could potentially be seen on weaker figures.

-ECB rate decision comes on Thursday with the associated statement from Trichet. This is typically a market moving event. A dovish tone from Trichet could very well see the EUR/USD move to the downside and further USDX upside.

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