Back in April the dollar closed below the 20 SMA. That was followed by a bullish engulfing bar in May. The monthly bars have a lot of lower tails. There appears to be strong support below 95. In Daily update 5/3 I wrote
"The dollar has had quite the move down this year. It is in the process of testing its prior correction low from last Aug. It has finally worked off the excessive bullish sentiment that built up from the massive rally that started in 2014. I am seeing calls for a dollar collapse. As you all know I don't believe that is in the cards. Today was a key reversal day and look at that volume pattern. A high volume down bar yesterday and an even higher volume upside reversal today. Coming in the area of a retest. UUP is further below that Aug. low then the actual dollar index is due to tracking error. The dollar index closed today well back above its Aug. low. I think this is the bottom for this move down in the dollar. An upside reversal could put some pressure on oil and other commodities. That could include gold. I will be watching the dollar closely to see if it follows through on the upside reversal."
The dollar clearly followed through on the upside. However, that has not bothered oil yet. Gold and some other commodities have pulled back some though. It looks like the dollar has made the low for its correction. While it may consolidate some this month I expect it will work higher in the months ahead. An eventual break out on the upside seems very likely. I have not heard much talk about the dollar lately. It is like traders have not really noticed it is going up. At some point that will change if it keeps progressing higher. One thing I have heard many times from the pundits predicting SPX will break out on the upside was an expectation the dollar was going lower. What happens when people realize that is not happening?
Bob
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