The dollar made yet another new high Wednesday, after closing higher Tuesday despite potential recoil against the US decision to pull out of the Iran agreement. The strong trend higher, that started back in mid-April, looks to continue as rising yields in the Treasury markets could cause a flood of foreign money into the US dollar. Momentum studies are at overbought levels which will accelerate a break in the lower trendline down to support at 92.22. Any corrective setbacks would need to hold yesterday’s low of 92.50 for the trend to push to the next upside target is at 93.51.
The Euro traded down to start the day, again making a new lower low, as soft data from French industrial output and Italian retail sales were reported lower than expected. The move lower is also being pushed by the market observing future hikes in the US interest rate as well as the continued strength of the dollar. With momentum studies declining to oversold levels we could expect to see some corrective action but would need a close above 1.1960 to see the short-term trend reverse. Trendline support comes in at 1.1820 with the next downside target at 1.1750.