The U.S. dollar index is sharply down, following a horrendous day for Chinese equities that did not spark any "safe haven" buying. The 8.48 percent drop in the Shanghai composite was the second worst day ever for the composite since 2007.
Traders feared that the Chinese government and the People's Bank of China (PBoC) would pull any assistance to help keep their fragile stock market afloat, just as the Federal Reserve is presumably going to tighten monetary policy somewhere between a year ago and who-knows-when.
The euro spiked higher on a combination of a weaker dollar and German Ifo business climate gauge snapping a series of declines. The dollar's losses are keeping steady after another disappointing durable goods print. Although beating economist expectations this month (initially), the last five months of data have been revised lower. Last month's .5 percent increase was reduced to zero.
Price action, on the daily chart, is skipping along support at 96.50/55. The DXY has been unable to gain any significant momentum, following a rather poor corporate earnings report all of last week.
The DXY is at a crossroads, finding itself breaking the current wave's ascending support but holding onto a minor descending support trend line. A close above these two minor support levels could send the dollar to 95.85 and, potentially, 95.30.
However, if support holds, the dollar can retest 97.25 before attempting to challenge the major descending trend line near 98.15. It is important to note that trend strength is dropping with the ADX slopping over. The DMI indicator is suggesting that a bearish DMI convergence is in the works, as negative price action could take over.
Expect price action to continue to chop until either major support or resistance is broken, which will have strong implications in terms of direction.
Traders feared that the Chinese government and the People's Bank of China (PBoC) would pull any assistance to help keep their fragile stock market afloat, just as the Federal Reserve is presumably going to tighten monetary policy somewhere between a year ago and who-knows-when.
The euro spiked higher on a combination of a weaker dollar and German Ifo business climate gauge snapping a series of declines. The dollar's losses are keeping steady after another disappointing durable goods print. Although beating economist expectations this month (initially), the last five months of data have been revised lower. Last month's .5 percent increase was reduced to zero.
Price action, on the daily chart, is skipping along support at 96.50/55. The DXY has been unable to gain any significant momentum, following a rather poor corporate earnings report all of last week.
The DXY is at a crossroads, finding itself breaking the current wave's ascending support but holding onto a minor descending support trend line. A close above these two minor support levels could send the dollar to 95.85 and, potentially, 95.30.
However, if support holds, the dollar can retest 97.25 before attempting to challenge the major descending trend line near 98.15. It is important to note that trend strength is dropping with the ADX slopping over. The DMI indicator is suggesting that a bearish DMI convergence is in the works, as negative price action could take over.
Expect price action to continue to chop until either major support or resistance is broken, which will have strong implications in terms of direction.
