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Currency Market: US Dollar Index Is Testing the 200-Day Moving Average Support Level


DX futures need to find long-term support here in the 80-81 level, so pay attention!

MINYANVILLE ORIGINAL The US Dollar Index (UUP) (UDN) has decisively broken key short-term support levels. As expected from last week's update, it is testing the 200-day moving average, which currently lies just below the 81 level. This longer term support level must provide an end to this recent US Dollar Index selling, or else we might have to change our view on this market.

I would expect a relief rally from these support levels at some point over the next week, but I'm afraid we can't be aggressive again on the long side of this trade until we start to see the DX closing back above the 83 level. Only a move above there would confirm that the bullish trend in the US Dollar Index has resumed. For now, I think we need to be patient and see how this market develops over the next couple weeks. Investors and traders are coming back from vacation and will begin to position portfolios for the coming quarter end. Last month was rough for the DX. Will September bring some faith back to US Dollar Index bulls? Time will tell. See the chart below.

Click to enlarge
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