Top Story

Dollar Index Uptrend Intact, Bulls Watching for a Break Above 97.70

In the last 30 hours alone, we’ve discussed the outlooks in EUR/USD, GBP/USD, and AUD/USD, but we haven’t reset the bigger picture outlook for the world’s reserve currency.

The US Dollar Index was able to shrug off the weaker-than-expected April Retail Sales report, but it finally succumbed to selling pressure on news that President Trump would delay tariffs on EU automobiles.

Turning our attention to the chart, the dollar index broke above previous resistance in the 97.70 late last month, but bulls were unable to maintain that move. Over the past three weeks, the index has formed a “descending wedge” pattern; despite its name, this pattern is generally seen as bullish, especially when it comes in the context of a longer-term uptrend, as we see today:

Source: TradingView,

Furthering the optimistic perspective, the MACD indicator is holding in bullish territory above the “0” level, signaling generally bullish momentum. Crucially, the index’s average true range (ATR) has fallen 40% from its start-of-the-year highs. Because market volatility tends to be cyclical, the current low ATR reading could hint at a higher-volatility breakout in the coming days.

As it stands, the chart favors a bullish breakout in the buck and a potential run toward 98.50 or 99.00 from here. That said, a break below Monday’s low near 97.00 would signal that the bulls are losing momentum and could foreshadow drop toward the longer-term bullish trend line near 96.50 or lower.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.