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17 Jan 2013
Forex Flash: Dollar Index could soften further – Wells Fargo
FXstreet.com (Barcelona) - Nick Bennenbroek, Head of Currency Strategy at Wells Fargo feels that the U.S. dollar could soften further in the near-term given Fed easing and as improved market sentiment supports foreign currencies, before firming on volatility surrounding U.S. budget talks.
In the longer term however, he suspects that the Greenback should gain against the Euro, yen and Pound on economic out performance. However, he feels that USD will probably slip against commodity and emerging currencies, with those currencies helped by improving global markets.
Looking to technicals, he notes that there is currently a bearish outlook ahead, with the 20d MA remaining below the 50, the RSI of 48 is in neutral territory while other momentum indicators are consistent with declines. He sees downside support at the prior low at 79.01 (December), 78.93 (October), 78.60 (September) and 78.10 (February). He expects resistance from prior highs at 80.87 (January), 81.46 (November) and 81.82 (late August). Down-trend resistance since July is current at 80.65.
In the longer term however, he suspects that the Greenback should gain against the Euro, yen and Pound on economic out performance. However, he feels that USD will probably slip against commodity and emerging currencies, with those currencies helped by improving global markets.
Looking to technicals, he notes that there is currently a bearish outlook ahead, with the 20d MA remaining below the 50, the RSI of 48 is in neutral territory while other momentum indicators are consistent with declines. He sees downside support at the prior low at 79.01 (December), 78.93 (October), 78.60 (September) and 78.10 (February). He expects resistance from prior highs at 80.87 (January), 81.46 (November) and 81.82 (late August). Down-trend resistance since July is current at 80.65.