Where next for the US dollar?

US dollar index - weekly chart
US dollar index – weekly chart

Following continued bullish momentum for many of the major currency pairs, these are now approaching key technical levels, which if breached could prove to be the tipping points for some sustained and longer term trends to develop. Much of the recent bullish momentum for the EUR/USD and the GBP/USD has come from the sustained US dollar weakness of the last few weeks, which has seen the dollar index break below the 80 region and is now testing a significant level of potential support in the 79 region, a price region which has seen the index bounce higher in the past. However, given the depth of this potential support, if this is breached then expect to see the dollar decline further, which in turn should provide the catalyst for the euro and the pound to break higher and away from recent consolidation phases of price action.

GBP/USD monthly chart
GBP/USD monthly chart

Cable has already breached recent resistance in the 1.6850 region and now looks set to test the 1.7000 in due course. The monthly chart for the pair gives a clear picture of the congestion phase which was breached last week, and with clear water now ahead, expect to see further upside momentum driven by dollar weakness and solid fundamental news from the UK.

EUR/USD monthly chart
EUR/USD monthly chart

For the euro dollar it’s a similar picture with the pair now breaking out from longer term congestion, and moving into clear water above, all supported by the rising triangle price pattern. Provided the 1.4000 level is breached with strong and rising volume, then once again we can expect to see further upside momentum for the pair, provided the US dollar does indeed breach its own key level to the downside! By Anna Coulling

About Anna 2016 Articles
Hi – my name is Anna Coulling and I am a full time currency, commodities and equities trader. I have been involved in both trading and investing for over fifteen years and have traded many different financial instruments, from options and futures to stocks and commodities. I write and publish articles ( mostly for free ) for UK and international publications on a wide variety of financial issues, and in particular I enjoy helping others learn how to invest and trade.

6 Comments on Where next for the US dollar?

  1. I got interested in shares but have no knowledge about them so hunted on internet and came up with this site . Thought I would send for free booklet to help , signed up and waited no booklet .
    Sent email requesting help no answer , will now look elsewhere as if this is the level of help you can expect then it is dismal.

    • Hi Michael – many thanks for your enquiry. Unfortunately my mother who is terminally ill passed away on Friday, so I have been a little preoccupied over the last few weeks caring for her. Naturally I can only apologize for the delay in replying. With regard to the download, this is for forex and not for stocks, so I’m not sure how relevant this will be for you, but happy to send if you would like a copy. You will be pleased to know that the next book I am writing will be purely on trading equity markets, so perhaps this will be more appropriate for you. All best wishes and thanks once again – kind regards – Anna

  2. Dear Anna,

    First time of browsing your stuff, really good for a beginner like me. Sorry about the passing on of your mum, may her soul rest in perfect peace.
    Do you have a free booklet on forex please

    regards

    • Hi Abi and please accept my apologies for the delay in replying, and thank you for your kind words. The last few months have been very emotional and stressful, but things will return to normal in the next few months:) Many thanks and delighted that you are enjoying the site and you will find more regular content now that I am getting back to trading full time. All best wishes and thanks again and if you do have any questions please just drop me a line – always happy to help – kind regards Anna

    • Hi Javier, many thanks for your question and apologies for the delay in replying. Unfortunately this is not something I offer at the moment. There are traders who do offer this sort of proprietary service where their trades are executed in your account, and managed through a regulated broker. If you would like more details I’m more than happy to try to point you in the right direction. Apologies once again and all best wishes – kind regards Anna

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