Currencies: Since I think most of this week’s price action is dependent on the event risk (FOMC policy), I will focus my attention on the technical viewpoint. The DX trend line of the last 2 ½ years from the March ’08 low has provided critical support. It has been tested and held over the last 3 weeks. A downtrend resistance line, from the June ’10 high, currently sits near 80 and I think the dollar bulls will want to see it surpassed to swing the vote back their way. The RSI is offering an uptrend line resistance of its own, coincidently dating back to the June’10 high. I would suggest watching for any trend line breaks as a potential indicator of trend reversal or continuation. Volatility ranges have been contracting but I don’t expect this to continue forever. Perhaps next week’s data will hold the key.
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