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The Dow Jones FXCM US Dollar Index is testing support at 10527, the 50% Fibonacci expansion. A break below this barrier on a daily closing basis exposes the 61.8% level at 10473. Alternatively, a reversal back above the 38.2% Fib at 10581 sees the first layer of significant resistance at 10648, the 23.6% expansion.
The greenback produced its first string of back-to-back weekly declines since mid-October. Looking through near-term volatility however, we maintain a broadly supportive long-term outlook. Furthermore, the fundamental backdrop hints a reversal may be ahead. We remain long the US Dollar via the Mirror Trader US Dollar currency basket. **
Daily Chart - Created Using FXCM Marketscope 2.0
** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com