DOLLAR INDEX: Downside Risk Develops Towards 75.24/74.17.
DOLLAR INDEX: The Index’s bullish recovery the previous week has almost been reversed suggesting it could be preparing to resume its long term downtrend as we enter a new week. This development now leaves the Dollar Index targeting its 2011 low at 75.24 with a breach of that level setting the stage for a further weakness towards the 74.17 level, its 2009 low followed by its 2008 low at 71.31. Its weekly RSI is bearish and pointing lower supporting this view. Alternatively, on pullbacks, the 76.12 level will be targeted at first with a violation of that level turning risk to its Feb 22’2011 high at 78.32. On a break of that level, the index will strengthen further towards the 79.59 level, its Jan 17'2011 high. Further out, resistance stands at the 81.31 level. All in all, the index remains biased to the downside long-term as it looks to resume that trend.