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Currency Market: US Dollar Index Has Stalled Out at the 80 Level, and Looks to Be Rolling Over


The euro found support at the 200-day moving average, and precious metals look like buys.

MINYANVILLE ORIGINAL The US Dollar Index is now testing 80 from below, and so far it is proving to be a formidable resistance level. There is much heavier resistance just above, near the 200-day moving average and the 81 level, so any rallies above 80 probably don't have much more upside at least in the near term. With the risk off market today, it looks like that the USD will rally back above 80. If it can get back above 80.5, it might be worth starting to add some USD short positions. That entry level would offer the best risk reward.

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The euro bounced right on the 200-day moving average on the recent pullback around 1.285. This morning, it is back below the 1.29 level. The euro will probably have some decent short-term support here, even if things are still pretty crazy over on the other side of the pond. It will be interesting to see if the pullback today is bought like it was last week. Time will tell, but it still looks like the trend is the euro could be turning higher against the US dollar. See the euro chart below.

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The precious metals look interesting to me here on this pullback; I think gold, silver, and copper have reached levels where you can buy long positions with a tight stop. This provides a pretty good risk reward entry point to markets that will benefit from continued weakness in the USD. Gold would probably be my favorite play here; if the trend higher resumes, we could see this market push to new highs before the year is over. See the GLD ETF chart below... Time to buy the pullback!

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Positions in EUO.
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