Technical Analysis: US Dollar Index on Track to Break Out

U.S. dollar strength is back on the table as the Federal Reserve prepares to increase interest rates in September

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Ed Carlson

The previous Friday’s expected low cycle was successful in starting a rally last week in which the US dollar had its best week since May. DXY gained 1.89% to close at 97.99 above the June 1 high and printed an engulfing bullish candlestick on the weekly chart.

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A cup-and-handle pattern has been triggered (chart) and measures a minimum rally to 101.00. A symmetrical triangle on the monthly chart (not shown) measures a minimum move to 102.00 which is the 61.8% retracement of the 2002 bear market. 102.00 is also a 127.2% retracement of the April/May decline (chart).

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