After a sideways market shown by the US Dollar index over a couple of days, the index finally made a new local high set in March at 80,49. Therefore, the price peaked at 80,64 during yesterday's American trading session.
The US Dollar was mainly supported by negative news for other major currencies and, of course, the expansion of the US service sector.
Clearly, the US service sector is expanding more than expected, thereby pushing the american currency higher against other majors. The index gained 53,1 in March after 51,6 in February. On top of that, this is the highest level in 4 years. Apparently, the US economy is reviving after a cold winter, which affected consumers and businesses in the USA.
The US economy seems to be growing relatively steadily. So, it is not accidental that the Fed decided to continue tapering QE3. By the way, this is another reason why the US Dollar is gaining value against other currencies. When quantitative easing is cut, the currency naturally strengthens.
At the same time, the preliminary jobless claims report indicated an increase up to 320K. Still consumer confidence improved during the reporting period. And the amount of people employed las month increased as well. Coupled with higher orders, this also testifies to economic growth. Economists believe that this was the weakest quarter of the year and the next 3 quarters are going to be much better for the US economy. This definitely reassured the market.
Now it is time to take a look at the near-term prospects of the American currency.
According to the recent analysis conducted by Masterforex-V Academy, the H4 chart of the USD index indicates that the price moved inside the 80.08-80.49 price range during yesterday's European trading session. Up until the American session, the index didn't show its intensions. Still, after the reassuring economic figures we mentioned above, the USD index instantly rallied, thereby pinning through the top of the mentioned price range.
This rally ended up with setting a new local high at 80.64. It is interesting to note that the price managed to come easily through a major level of resistance located at 80.56. This move confirmed the end of the mid-term bearish move. The chart indicates only a part of the bearish move (the dark purple line). So, at this point, the index is trading around the mentioned level.
The further intensions of the index will clarify when the price finally consolidates above or below the mentioned level.
Therefore, in order to continue the rally started yesterday, the price will have to consolidate above the mentioned 80.56 level. If this is the case, it will give way to further highs. The price may encounter resistance at 80.88.
As for the closest major levels of support for the US Dollar index, they are represented by 80.10 and the bottom of the MF sloping channel. There is another level. It is located at 79.87, Masterforex-V Academy reports. As far as a long-er term tendency is concerned, the bias is still bearish, the experts say.
