The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
US Dollar Index catch leg up from ECB
Yesterday’s dovish ECB managed to have a profound effect upon the US Dollar Index, which saw a major move higher yesterday. The Dollar Index comprises of six weighted currencies against the US dollar, yet the weighting is heavily towards the euro, which makes up 57.6% of the index. This explains the size of this move yesterday and the fact that euro volatility will heavily affect this market. Thus as the PMI readings come out this morning, we are likely to see movement with strong readings treated as Dollar Index negative while weak readings would boost the index.
We have since seen the index drift lower in a flag formation, and as such I expect to see another leg higher soon. Downside support is provided by the Fibonacci levels of 23.6% ($96.40) and 38.2% ($96.19).
We may have to wait for the PMI readings to all be announced, but ultimately I expect a resolution towards the upside, with a move back to $96.89.