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US Dollar Index Is Turning Higher at Key Support and Should Not Break 82


The Aussie dollar is breaking support levels cited last week, and the euro should roll over.


The US Dollar Index has turned higher right where it should, and if the bull trend is to resume, then the DX should not break back below 82. I continue to like the risk reward of the DX at these levels, and now that we have some headline risk out of the way, the market should be able to resume moving higher. I would also keep a very close eye on the US bond market, as it looks like rates could be turning higher here. I think the DX could easily rally into the high 80s so the risk reward is very nice here.

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The euro has failed right where it should on the recent rally, and now that the ECB rate decision is out of the way, I think we could see the euro roll over back below the 1.30 level. There is still a pretty clear head-and-shoulders top forming in this market, and with the downside target at 1.20, you can see why I love the risk reward of euro short positions here above 1.30. I have a hard time seeing the euro trade above 1.32 so you basically have the setup of a 10 to 1 reward to risk trade. Take that any day!

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The Australian dollar short has also been working pretty well lately, and it has broken major support after the RBA decision to lower rates to historic levels. I have been watching this 1.02-1.06 range which has now broken to the downside, and that would project a target to 0.98. I would let this winner run, and add to Australian dollar short positions on any rally back above the 1.02 level. Good luck out there!

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