After a couple years of gloom, the U.S. Dollar is setting up for a nice rally.
And this could spell trouble for the Euro.
The buck stops here! As the reserve currency, the U.S. Dollar wields some power in the currency market. And a strengthening dollar will likely put more pressure on the Euro.
We can see this already occurring in today’s chart 2-pack.
On the left, we can see the U.S. Dollar breaking out of a bullish declining wedge pattern (1). This should lead to more upside.
Meanwhile, the Euro kissed the underside of a “broken” wedge pattern – resistance at (2). The Euro was rejected swiftly… will this lead to more downside? As I wrote about last week, this is deja vu for the Euro!
U.S. Dollar vs Euro Chart
It’s also worth noting that the U.S. Dollar rally started from a cluster of trend line support. That area should provide a floor for the buck over the near term.
And if King Dollar really flexes its muscle, the Euro may retest its near-term lows (November 2017) and possibly its intermediate term lows (December 2016). Worth keeping an eye on for traders and asset managers alike!
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