The week ahead should be interesting for the dollar. The dollar is back to a very important area. The Higher Lows long-term that the dollar has been tracking within the current uptrend is well within reach. We have the ECB this week along with the Jobs data. Will this be the proverbial “Sell in May & Go Away” for equity markets or will the dollar break 92 and continue its decline pushing commodities and stocks back on the highs? See that attached charts but this area for the dollar will be very key this week.
We can see on the Daily chart that the trend has been down since March and the 200 period mov avg and Pi (the red dashed line) have started to roll over, as well as the wave structure as per the ribbon bands are flowing down as well. This has been the immediate-term downtrend since March that has pushed the “reflation” trade higher. From here we are at a crossroads – this trend is now running into levels on the higher timeframe were the dollar remains in a LONG-TERM bullish uptrend.
On the Weekly Chart we can see where the Dollar Index needs to hold to maintain the current bullish structure by putting in another Higher Low LONG-TERM. If Dollar (DXY) can’t hold this 92/92.5 area then further decline and a much deeper pullback down to the 200 week moving average (currently around 86/87) is very likely. So overall this area will be key on a Weekly Closing Basis. Stay Tuned.