Friday's candle for the Dollar Index finished the session trading marginally higher on the day and closing above both the 9 and the 14 day moving averages which have now crossed, suggesting that a modicum of bullish sentiment for the US dollar has now entered the market. Indeed this view has been reinforced with a gapped up opening in this morning's early trading perhaps providing a hint as to the short term direction of the dollar for the later in the week. The key to any longer term and sustained upwards move will be if the index can break and hold above the 40 day moving average coupled with a rally and breach of the 85.50 to 86.50 price region. If both these events occur then we may be witnessing a return to strength for the US dollar in the medium term but given the complex inter-relationships between commodity prices, equity markets and the global economic picture this is far from a certainty. In many ways the future of the US dollar is inextricably linked to crude oil prices and the performance of the S&P 500, the former of which shows little sign of reversing its current upwards rally.
