Nick Nasad
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USD Index: Greenback at 2-Mo High, More Gain Ahead Or Time For Retreat?

The Dollar index has had a good run throughout January, after finding support for a second time just below the 80 level.

  • While it hasn't been a straight line, the dollar index (heavily influenced by the USD's performance against the EUR, GBP and JPY) has pushed to 81.45, setting a 2-month high.
  • Just ahead is 81.60, which was the best the USD managed in the 4th quarter of 2013. Can the Greenback push through that level?
  • If so it would have a significant impact from a technical perspective and a run towards 82.70 (early September's highs) would be in the cards.
  • For that to happen, US data as well as FOMC members comments would have to point towards the tapering schedule laid out by Bernanke in his last FOMC press conference.
  • In the opposite scenario, the 81.60 level acts as a good resistance level and the Dollar faces another wobble. In this case, the tapering schedule is softened - if the data in the US, especially labor and inflation disappoints the FOMC.