Dollar Holds Despite Commodity Rally

Overall, the major pairs are preparing to wrap up a day in which the market has again failed to move anywhere of importance. The major pairs plunged to fresh lows throughout the European trading hours against the dollar, but the market took advantage of the U.S. session to retrace most of these declines.

Since the day started, the only currency that actually strengthened against the dollar was the cad, while all the others are trading in the red. Traders should note that the dollar index was able to hold ground on Tuesday, even though the commodity market posted very strong gains. Usually, a strong commodity market automatically creates short dollar orders. Maybe we have a dollar-high swing point in the near term.

Dollar Index Technical View: TheLFB Member Charts

Daily chart trend: Short. Main price points: 75.00. Looking for: Ending diagonal

Prices on the dollar index daily chart are threatening the upper line of an ending diagonal, where a break-out will confirm that the bottom is in place. In this case, a retracement into the red wave IV area will be expected, while the current lows around the 75.00 zone must hold.

The RSI indicator is showing a bullish divergence, which also indicates a change in trend direction.

The euro (EUR/USD 1.4705) fell as much as 150 pips during the intraday session, to test the 50-day moving average. Since then, the euro has retraced almost half of the down trend. Moreover, the euro retraced the move in the 1.4700 area, which has been the main support area of the last five days of trading. On the daily chart, the euro appears to be forming a bullish pin-bar formation.