The US Dollar has largely been sitting on the sidelines watching the stock market take the path higher. Since October the US Dollar Index has traded in a 2 point range between 95.50 and 97.50. Trade troubles did not move it. Interest rates rising did not move it. No more rate hikes did not move it. But that is now changing.
Wednesday the US Dollar Index broke this range and moved to nearly a 2 year high. It also pushed over the 61.8% retracement of the move lower from the high at the end of 2016. Does it have more room to go?
The chart above showing price action from the past year might suggest yes, there is room for more upside. Momentum is strong with the RSI on the cusp of a technical overbought signal, and the MACD positive and rising. The Bollinger Bands® had squeezed and are now open as it move higher, allowing more upside. And the move out of a 7 month base also supports more than a 2 day run higher. A retest of the 2016 would not be too far given the length of the consolidation.
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