By Michael Boutros, Currency Strategist The greenback posted its largest single daydecline this month with the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR ) off by more than 0.58% at noon in New York. Thedecline pared the entire week’s advance with the index nowback below former long-standing trendline resistance dating back tothe October highs. Although CPI data came in at expectations, aweaker than expected University of Michigan confidence surveyaccelerated the dollar’s decline with interim support seen atthe 61.8% Fibonacci extension taken from the August 1st and October27th troughs at 9945. The index has now completed a 5-wave rallywith the correction likely to find support at this level beforeheading lower. Only a break of the ascending channel formationwould shift our bias more aggressively bearish. Note that a breakbelow RSI trendline support risks further losses for the greenbackwith such a scenario likely to challenge channel support. Dailytopside resistance stands with the 78.6% extension at 10,080 backedby 10,134. An hourly chart shows the index breaking belowchannel support dating back to the February 29 th lows before losing steam just ahead of the61.8% extension at 9945. A break here eyes subsequent floors at9920, 9900 and 9875. Topside resistance now stands with formerchannel support backed by 10,030 and 10,055. Note that RSI now restdeep in oversold territory with a pullback offering favorableshorts as the dollar continues its descent. The greenback fell against all four componentcurrencies for a second consecutive day highlighted by a 0.85%decline against the British pound. For complete scalp targets onGBPUSD, refer to today’s
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