“While the dollar index did pull back from its post-election highs over the past few months, Rich Ross of Evercore ISI sees a ‘bullish wedge’ that started developing just before the start of 2017. The wedge Ross observes shows the index making higher lows just below 99,” reports CNBC.
Eurozone political volatility, Brexit aftermath and Japan’s overt efforts to weaken the yen indicate the dollar should remain strong against the euro, pound and yen. However, safe-haven bets could spur the yen higher against the dollar, if only for a short while. In reality, the euro rallied in advance of the recent French election and the pound is rebounding this year as markets reconcile Brexit plans.
“Ross says that the wedge is also going toward the 50-week moving average, a trendline that has been gradually moving up this year for the dollar index, which compares the dollar to a basket of major currencies made up primarily of the euro. The technician considers the 50-week moving average ‘support’ for the dollar, meaning he sees the currency bouncing up once the wedge meets the line,” according to CNBC.
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