The dollar has seen a rather topsy-turvy 2016 so far, with the first four months characterised by dollar weakness, followed up by a recovery in the following five months. With the dollar typically the most commonly traded currency, it is worth noting how things look for the greenback before turning to some of the most commonly traded currency pairs for Q4.
Since bottoming out in May, the dollar index has been in its ascendancy. Despite a slowdown in this resurgence, we have not yet seen anything to say this rally is over.
The gradual incline seen over recent month’s means we have seen deep pullbacks, with both the June and August lows coming into 76.4% retracements before moving higher once more. Given the rally into this pattern, this range is expected to remain in place until we see a breakout.
Thus, as long as we do not see an hourly close below 94.11, there is reason to believe the dollar will continue to perform over the coming months.