The direction of the U.S. Dollar is very closely watched. It is the world's reserve currency, and commodities and other assets are priced in dollars.
Let's check out a few dollar charts.
In this daily bar chart of the U.S Dollar Index (DXY), I see a precarious situation. Prices are weak and trade below the cresting 50-day moving average line and below the declining 200-day moving average line.
Prices have broken the lows of February, April and May. The trend-following Moving Average Convergence Divergence (MACD) oscillator is bearish with its recent move below the zero line.
In this weekly Japanese candlestick chart of DXY, below, we have to use our imagination to visualize the decline this week. Prices trade below the declining 40-week moving average line. The weekly MACD oscillator is bearish. The $97-$96 area may act as support.
In this daily Point and Figure chart of the Dollar, below, I can see a potential downside price target in the $88 area.
Bottom line strategy: The Dollar Index looks like it will head lower. A weakening Dollar should give a bid to emerging markets, and precious metals and commodities in general.
