The dollar index continued its inexorable slide lower last week, but ended on Friday with a doji, which seemed to offer some small respite to the recent downwards trend in the US dollar, as the index paused for breath. However, the signs are not good, and we may well see a renewed sell off in the US dollar, with the index plunging lower once again, should risk appetite return in equity markets. The first key technical level is now very close at 78.50, and should this be breached then we may well see a fall further down to the 76 level, and if this fails to hold then a much deeper move could result. With all three moving average now weighing heavily downwards, only a significant shift in investor and market sentiment will provide the necessary brake, to stop a further decline in the dollar index chart. Once again, the signals are not good this morning in early trading, as prices have opened gapped down in early trading, adding further pressure to the already heavily bearish tone.
