Risk aversion continues to reign, and the USD continue to gain across the board, especially against the commodity currencies. The Euro also is pressured by the uncertainty of the Greek election and the relationship between new French president Hollande and German Chancellor Merkel. (Sarkozy has been agreeable to the German-led austerity measures).
USD Index Daily chart 5/9/2012 10:30AM EDT
The USD Index heavily weighed by the euro, therefore is in a strong breakout to the upside. The daily chart shows the market pushing above a recent declining trendline as well as the 80.35 pivot. This opens up a very short-term resistance pivot at 80.75 which was resistance in March 2012, but also resistance in Dec 2011 , and support again in Jan. 2012.
Above 80.75 and the 81.00 handle, the market opens up to 81.60, which was the resistance pivot Nov. 30/Dec.1 2010, and then again Jan. 2011. The market reacted there wish swings down to about 79.00 where it found support until mid-Jan.2011. Right above 81.60, the 82.00 handle was also the high from Jan. 2012. Therefore, the 81.60-82.00 zone is in sight as a potential target, as well as a potential resistance. An aggressive outlook for a reaction here is down to 79.00 like in the end of 2010-beginning of 2011. However, a conservative target could be back to the 80.75-81.00 area.
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Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.