With the fx markets waiting to see if the ECB will make any action that will influence the euro, the Dollar index remains weak and above critical support at 79. The dollar index will surely be affected by its major component (EUR/USD) and if any action is taken, volatility will surely pick up. My short-term target for the Dollar index is 78.75. I believe the support at 79 will break and we will see a sell-off as I also expect EUR/USD to reach 1.40.
Trend remains down. Price is making lower highs and lower lows. Price is below the blue trend line and below the Ichimoku cloud. Resistance is at 79.70 and 80. For a reversal to take place bulls will need to break above 80.
The daily chart continues to confirm that the trend is down. The current pattern in the daily chart is bearish with targets reaching as low as 75. Trend reversal and stop loss level for bulls is the 80 area. A daily close above 80 price level could change the entire picture from bearish to bullish. This could happen in case ECB looks to take action to weaken EURO. Until that happens we target lower and we advise bears to be very cautious and lower their stops as volatility is expected to rise sharply during the next few days.
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