US dollar index at the highest level for almost two years
The US Dollar Index has rallied sharply over the past year, and the bulls have pushed the market higher. Wednesday’s candle moved the index up to the essential structural level at 97.80.
The US dollar index is a good indicator of the stability of the US currency against other currencies. It measures the US currency against six other currency pairs.
The steady rise of the US dollar is unlikely to please the government in Washington. A strong dollar could hurt the competitiveness of the US economy in the long run.
With Thursday’s candle, the index climbed as high as it did in May 2017. So, it may only be a matter of time before the White House tweets on this issue. President Trump has often spoken negatively about the strong US dollar. He does not hold back from criticizing the Federal Reserve and its monetary policy.
A statement by President Trump could lead to a market correction in the short term. However, the US stock markets are currently performing quite well with new all-time highs, and this could induce the Fed to tighten the interest rate screw once again. This could lead to a further strengthening of the US currency.
A glance at the chart shows that the US dollar index is currently trading at an essential structural level. The area around 97.80 could be crucial for further progress. If the bulls manage to carry the market above this threshold, then additional resistance could lie in the 98.55, 99.37 and 100 areas.
However, if the bulls let go, then support could be in the 96.92, 95.93, 94.95 and 94.12 areas.
The MACD oscillator is in positive territory and is tracking the movement of the index.
USDIndJun19 Daily Chart | Source: ActivTrader
Written by Daniel Schuetz, External Analyst
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