Dollar Index Technical Analysis – WC July 8th – Price Breaks Above Key Resistance
- Our previous updates noted that the USDX 84.20 level marked the 61.8% Fibonacci retrace of the last major swing lower, and that this could become a focus if the recent upside trend continued – as would the 84.55 area prior swing high.
- The dollar has now jumped above this key technical area, as markets expectations have increased that interest rates will start rising in a year.
- This price action development on Friday comes after the false breakout of the descending trend line in May for the USDX. Which subsequently had the USDX retest the ascending trend line support area on a corrective move lower.
- The key EURUSD pair dropped three quarters of a cent against the dollar – to trade near $1.2804 - and gold declined almost 3% to the $1,208 per ounce area.
- The yield on 10-year Treasury bonds (the US government’s cost of borrowing) rose from 2.5% to 2.68%, the highest level seen in almost two years. The relationship between the U.S. dollar and Treasury yields is typically highly correlated.
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