Book balancing at the end of the first quarter has created near-term volatility, which was aided by U.S. ADP private sector jobs numbers that were negative, at -23K, against the expected +40K read.

Initial reaction was weaker equities and forex moves that are stuck in the overnight range. EU inflation has increased, as Unemployment moved to 10%.

Global markets have held support, but have not found enough equity or commodity momentum to break resistance. GBP/USD, USD/CHF, and USD/JPY have managed to move past the previous session's trading range. Short-USD moves may not be easy to hold until S/P futures markets can close above 1175.

There are still important U.S. economic releases to come, and the dollar index components are already showing overbought reads in the near term. The global markets are absorbing the breakdown in USD/Equity correlations, and traders need to be aware that equities dropping off resistance will empower USD buyers.

Dollar Index

Global risk markets are still holding in long mode, but unlike the previous 12 months of trade, are not impacting USD buying. It looks as though a market-wide move to get loaded into long-USD, long-term, positions is under way, in an effort to pre-empt any rate increases from the Fed.

The 12-month inverse S&P/USD correlations are breaking down; that points to continuing U.S. dollar strength, which in time, could easily lead to a test of the 85.00 area on the dollar index. Favor a long play, long term.

TheLFB Charting: Dollar Index Four-Hour Chart

Overall View: Uptrend continuation, if 82.54 support can hold

4 Hour Chart Flows: Long

Price Points
: 82.24

Looking for
: Move higher if 82.54 can hold

Momentum: The dollar index moved into long mode in early December.

Elliott Wave:The dollar index price action suggests a near-term bullish structure is building, after the 81.00 support region was reached, and shows that the U.S. dollar weakness over the past three trading sessions could be basing. Traders will look for a move higher with at least a three-wave structure, A/1-B/2-C/3 legs toward the 82.20 area.

The overall view is that the U.S. dollar will remain in a long trend, but only if 81.00 holds and the 82.24 top is taken out.
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