The US Dollar has continued to punish those that bet against it. It has been overbought for some time but as most seasoned investors know, overbought can stay overbought for longer than one thinks. This week the US Dollar Index (DX) broke through the July 8, 2013 weekly high of 84.965. This has put the market on notice and may signal more near-term upside. But, for that to happen, weâ€™d likely need to see a continuation of US Dollar strength into the weekend.
That said, here are a couple things to watch going forward to determine if this Dollar rally is ready for a breather, or for more upside.
1. Â I believe that a close on Friday, 9/26/2014 above 84.965 will strengthen the US Dollarâ€™s case for more upside. And further, this would continue to pressure commodities andÂ weaken precious metals. Gold Futures slipped to 1207.40 overnight but has since recovered and the SPDR Gold Trust (GLD) has recovered early losses today as well.
2. Â AnyÂ immediate give back that falls below this level and holds would likely indicate that the US Dollar is setting up for a pullback.
I had previously highlighted keyÂ resistance levels for the US Dollar in July and just a couple of weeks ago talked about the prospect of more US Dollar strength.
84.965 is the number to watch now.
US Dollar Index (DX) 5 Year Weekly Chart
This post originally appeared on See It Market.