Why The US Dollar Index May Be Nearing A Pullback?

Andrew Nyquist

The US Dollar has taken the financial markets (and investors) by surprise in 2014. But not simply because it rallied… but because the relentless nature of the rally. Several factors have provided tailwinds, including economic weakness in Japan, Europe, China, Russia, etc… Well, basically it looks like the U.S.’s mild recovery is holding the world up.

That said, it’s time for a quick US Dollar Index technical update.

The US Dollar Index is currently touching up near 90, having moved from 80 to 90 in under 6 months. Could be a case of too far too fast, but that’s not all that concerning to me (in fact the chart is bullish from an intermediate term view). What stands out to me right now is the developing divergence between the RSI (Relative Strength Index) and price. The past 3 months have seen the US Dollar Index head higher while the RSI has been falling (in a downtrend).

US Dollar Index – Daily Chart

us dollar rsi divergence december 22 2014

 

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No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

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