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Forex: US Dollar Index adds to gains, eyes resistance at 83.50

FXstreet.com (Barcelona) - The US Dollar Index closed the day slightly higher, up six pips at 83.32. The DXY traded as high as 83.45 at one point but was unable to hold onto all of its gains and leaked slightly lower at the end of the day. Retail Sales data out of the US beat expectations, coming in at +0.1% actual vs. -0.3% forecast. The coming European session will be busy with the German Zew due out at at 9:00GMT.

According to analysts at FXStreet.com, “One peculiar technical characteristic about the present index behaviour is the consolidation the USD is having right below mentioned 83.50/84.00 supply, a sellers stronghold. What this suggests is growing accumulation of bid orders building up pressure, a helping factor facilitating further climbs as stops to the upside get targeted. While at current area short term USD weakness cannot be ruled out - more as a pause to regroup further buyers rather than calling the rally a failure -, the USD looks set to show a more combatant spirit near term.”

From a pattern perspective, the weekly close above 82.70 was impressive and looks to have confirmed a “bull flag” pattern which has a measured move target of up near 85.80. Short term moving averages on the daily chart remain in bullish set up, with price above both the 9 and 20 dma’s. A daily close above 83.50 (high price from May 9th) would be constructive and could help open the doors for a move to 84.50 (resistance on weekly chart). Initial support comes in at 83.10 (the 50 dma on 1 hour chart).

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