It happened! Dollar eventually ended the two months sideways trend that has been going on since the middle of November. As we expected in our yesterday’s analysis of the EURUSD, it happened with the help of the CPI data. Yesterday, we talked about the EURUSD, today, let’s check the situation on the general Dollar Index.
Here, we had a pennant formation (green lines), which in theory should be a trend continuation pattern and promote the breakout to the upside. Reality hit this instrument differently and the price broke it’s lower line. That was a first crucial support to be broken thanks to the CPI print. Second one was the mid-term up trendline (blue), which was connecting higher lows since the end of May. Breaking those two should be enough to claim the bearish victory.
I have one problem to give this victory away just like this and this problem is the horizontal support on the 94.6 (orange). As long as we stay above, Dollar buyers can still have hope. Yes, breakout of this line will be the end of the USD strength in the mid-term but as long as this line holds, we still cannot claim full bearish victory.