Greetings everyone, with the French elections finally behind us, I believe Dollar bulls should expect at least a short-term bounce as we expect the EURUSD which is the main component of the Dollar index to retrace the recent rally that discounted the win of Macron in France. As explained in twitter last week I was expecting EURUSD to weaken and thus the Dollar index to bounce.
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With the EURUSD almost 100 pips from today’s highs, I believe the reversal has started and the bad technical picture I mentioned in twitter last week is finally taking shape.
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#EURUSD and don't expect Le Pen to win and so do all the polls, but what I see here is not bullish at least for the short-term pic.twitter.com/aDpIm3kXgj
— Alexandros Yfantis (@alexanderYf) May 5, 2017
Other pairs like GBPUSD and USDJPY remain inside their bullish channels, but USDJPY looks more vulnerable to a bigger correction towards 110 while GBPUSD as long as it trades above 1.2750 still has the potential for a move towards 1.31.
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USDCAD has already fallen 150 pips but some dollar strength towards 1.3710 could help the Dollar index as well move higher as we expect. Overall however I believe the downside for the USDCAD is not over.
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More detailed Dollar index analysis could be found here. My main scenario implies that the Dollar strength should push the index towards 99-100.50 area where the critical resistance level is. As long as we trade below 101.40 and 100.50 trend remains bearish in the USDX and I will be expecting selling pressures to come back again and push the index towards 94. Confirmation of down trend on a weekly basis will be seen on a break below 97. Long-term Dollar bulls will need to establish an important low around current levels and break above the red weekly resistance trend line.
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