A Breakdown of the US Dollar Index

The US Dollar is one of the more fascinating markets today. There are so many things going on currently that I think it’s hard to just group them all together. Remember there are several components that make up the overall index, so today I wanted to breakdown the different pieces and see how they fit together to make up the entire basket. We’ll focus on the biggest 4 names and see what we can learn from what is currently going on.
First here is the US Dollar Index itself consolidating nicely above the upper of these two converging trendlines since the 2005 highs. I have to say that as long as we’re above this downtrend line, there is no reason to be bearish this currency basket. In addition, the longer it remains above the downtrend line, the more likely that this breakout is for real. Momentum in a bullish range since 2011 and now confirming that as it enters overbought conditions is another positive for the US Dollar Index as a whole (see here for more on US Dollar):

The Euro is something very interesting here. We do a lot of sentiment analysis and they really loved this thing in May; at the worst possible time. Now that the Euro has gotten crushed, the sentiment is at levels not seen since Summer 2012, right before the Euro exploded higher into year end. (more)
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