The Dollar index is negatively influenced by the higher than expected CPI announced for EUROZONE today as EURUSD is its major component. The Dollar index is making lower lows breaking below important support at 80 and 79.95. Trend is down and unless the US GDP makes a surprise that strengthens the Dollar, we should expect the Dollar index to test 79.75 support and why not push even lower towards 79.
The weakness was evident as prices were hardly making a move above the 38% Fibonacci retracement. This downward break is a very bearish sign for the dollar as the entire sideways move could be a bearish flag. Short-term support is found at 79.75 and short-term resistance is found at 80.40.
The Dollar index is braking down sharply as EURUSD is making a move above the important resistance of 1.38. Bulls should have been stopped as prices have broken below our support at 80.15. The divergence in RSI on the daily chart above is making us cautious as to whether we should take part in this downward move.
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