POSITION: LONG US Dollar (UUP)
Higher-highs and higher-lows. That’s what the US Dollar Index is accomplishing all of a sudden. It looks like it’s going to close up for the 5th of the last 6 weeks, confirming both a bullish immediate-term TRADE and a higher probability of a continued bullish intermediate-term TREND.
In the chart below we show the newfound bullish intermediate term TREND line of support at $79.07. The corollary to this is that what was intermediate-term TREND support for the Euro is now resistance at $1.34. We’re short the Euro and long the USD and we’re likely to stay with both positions until they are either immediate-term oversold or overbought, respectively.
The immediate-term overbought TRADE line of resistance for the US Dollar Index is now $81.35. In terms of catalysts, we’re looking forward to Ron Paul’s subpoena of Ben Bernanke and/or a concurrent reduction in the size/pace of the Fed’s Quantitative Guessing program. Additionally, inflation accelerating should continue to provide a bid to US Treasury yields, which augers bullishly for the US Dollar Index.
Keith R. McCullough
Chief Executive Officer