Early last week, our cycle analysis predicted the formation of a short-term low in the US dollar index. As expected, the rebound off of that low during the last six sessions has been relatively weak, favoring an eventual continuation of the violent decline from late July.
Following the breakdown of the rally from 2011 at the beginning of September, the index moved sharply lower and returned to congestion support in the 78.50 area.
The 78.50 congestion zone is a meaningful support level and market behavior during the next few weeks will likely provide an important signal with respect to intermediate-term direction. We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.