Monday, October 10, 2016

We Could See A Breakout For The Dollar

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*The dollar has peeked higher from an important level.
*Safe haven status may be one driver.
*The other driver is higher US yields.

The dollar looks like it wants to go higher. The ETF UUP has a key level that looks like it is going topside. The reason for the move is probably driven by two factors: a flight to safety after the British pound meltdown and higher US interest rates.
Let's look at the dollar chart.
Source: Interactive Brokers
We drew a line where we think had the most important trading action over the last two years. The price is just under $25 UUP. We put arrows to show you where this line was a key level to hold, breakout, or breakdown. Traders have used this line to determine trading decisions.
Now, as you see on the chart above it looks like UUP is starting to make a move above this line. It's done that before of course, but we wanted to take note.
Why Is The Dollar Strengthening?
There are two main reasons we think the dollar is going up:
1. The British Pound
2. US Relative Interest Rates

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