FX Monthly (Mar ’16)
The USD Index DXY bounce from the 24.72 low of February is finding difficulty sustaining levels above congestion around 25.50, as both momentum studies and the Tension Indicator continue weaken.
Fresh downside tests are looked for in the coming months, as the bear trend from the 26.14 high of December 2015 gains traction, with congestion around 25.00 to attract. A break below 24.72, however, will open up the 24.43 low of October 2015, but a significant multi-month period of USD weakness and underperformance will be confirmed only if price action subsequently closes below critical support at the 24.20 range low of August 2015.
Whilst prices remain above here, heightened volatility is highlighted, as long-term investors remain cautious, with potential for a fresh push above 25.50. A close above here would help to stabilise price action, but a further close above the 26.50 year high of March 2015 is needed to extend the rally from May 2014 and turn investors decisively bullish once again.
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