US Dollar Index..........Is the Tide About To Turn?
The US Dollar Index(DXY), an index that tracks the dollar's value against six currencies has fallen about 14% from early March, thanks in part to the low rates and extra money printed by the Fed to lower borrowing costs.
The main variables to watch in order to gauge the direction of the US Dollar Index(DXY) this week will be the Fed statement and the jobs report. These may provide clues on how and when the U.S. government will start weaning financial markets from the trillions of dollars in fiscal and monetary stimulus pumped into the economy.
The Fed is expected to keep interest rates near zero. But it could hint at steps toward raising borrowing costs by other mechanisms. Any move perceived as bringing the Fed closer to raising rates would support the U.S. dollar, and that rebound could hit commodities and even stocks.
Technical Outlook
I have attached a weekly chart of the US Dollar Index(DXY). The chart shows that there is a downward sloping trend line that is currently being threatened as we find support around the 75.0-77.0 region.
If the 75.00 level is breached then we can see no further support until the 71.00 -72.00 level.
