Good day forex traders.

We last took a look at the US Dollar Index in the month of March 2010. With the recent market moves, it will be good to take a look now again.

In the previous review, we noted the US Index facing possible resistance in it’s attempt to go beyond the 80s. While the US economy was showing signs of recovery, the US economy was still plagued with problems such as foreclosures and unemployment.

Source : Bloomberg.

Looking at the US Dollar Index chart above, we can see that the US Dollar Index is facing yet another resistance area. We can see the resistance area having great significance in the last quarter of 2008 and again during the first half of 2009.

The situation now is different from 2008 or even 2009 as the main focus now is the Euro Zone. The current budget deficit crisis of the various Euro Zone countries is grabbing the headlines and the investors probably decide on their trades based on which region is not as bad rather than which region is performing better. The US Dollar is also a beneficiary of risk aversion in the market.

While the US may be taking a break from the media’s scrutiny for now, we must still be aware of the latest conditions of the US economy. To make money in forex, we must be constantly updated.

Budget Deficit remains high. In the last review’s it was $12,575,479,490,348.47. The latest from TreasuryDirect.gov is a total public debt of $12,987,916,782,708.55. Yes, it increased.
Unemployment rate as of the May Non-Farm Payroll is 9.9%.
Bank closures as of last Friday, a total of 78 for 2010.

For now if the situation in the Euro Zone does not get better, the US may get a longer “media” break. Be ready to adjust your positions when the moment of truth comes.

Trade safely.

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US Dollar Index Review May 10

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