The US dollar has been trading in a range for many weeks and there have now been some compression signals that probably mean the range will soon break. The two principal signals are in the Euro against the $ and the $ against the Yen, as shown in the first two charts below:
As I write, the Euro is breaking downward (i.e. the $ is breaking up) and the $ has already made some move up out of the $/Yen compression. Nether break is yet completely clear, but it is worth watching closely today and the next few days to see if a new $ uptrend is starting here, as seems likely.
The third chart above is the $ index which has made no signal but is a better overall measure of the value of the currency. It has a slight overall uptrend and is pushing at the recent highs so it would not be hard for that to succeed and for the trend to steepen. As ever with compressed markets, wait for the break.
Also (as usual) be wary of the ‘return movement’ that frequently occurs, in which a price that ‘breaks away’ from a compression subsequently re-visits the area of that compression before resuming the move. See page 6 of our userguide for details of this.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
