The U.S. Dollar Index (NYBOT:DXM14) appears to be in the process of an upside breakout from a significant resistance pivot around the 80.700 area on the chart. Price did briefly trade above here following the European Central Bank’s decision to cut rates on the June 5; however, the recent price action appears to have additional merit as the action appears to be purely market-driven as opposed to event driven.
If price can maintain the positive breakout, there does appear to be potential on the upside of the USD. Initial resistance may be seen around Thursday’s swing high at 81.065; however, there is not much additional resistance on the chart that would interfere with a rally in the dollar. Near-term momentum and intermediate-term trend align nicely with the bull campaign and the higher probability opportunity appears to be on the long side of this market.
Traders should be diligent in monitoring any corrective pullback to, or below, the 80.700 level because such action could confirm a potential “false breakout” in the dollar. Furthermore, traders should look for today’s positive momentum to persist above this morning’s swing low around 80.575.
U.S. Dollar Index 30-minute Bar Chart (e-Signal)