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US Dollar Index Continues to Grind Higher (And the July 2012 High Is in Reach)


The US dollar continues to be the best house in a bad currency neighborhood -- with the exception of Australian and New Zealand dollars.

The US Dollar Index has continued to grind higher and looks to be making its way to the July 2012 highs around the 84 level. I would wait for pullbacks below the 82 level to increase long exposure to the DX, although this strong trend might push towards that 84 level before we see a meaningful pullback. Going forward the 200-day moving average just above 81 and prior November highs around 81.5 should provide solid support levels where we could aggressively increase exposure. See the chart below.

Click to enlarge

I would continue to keep an eye on the Australian and New Zealand dollars here as they are pretty much the only currencies I follow that look good relative to the US dollar. Pullbacks in these two commodity currencies should be used as buying opportunities, and could be a nice hedge for short positions in European and Japanese currencies, as those are clearly still the weakest currency markets.

I will be up in NYC for the MTA's Annual Symposium starting tomorrow night, so please stop by and say hello if you are in the Big Apple! Good luck out there!
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