The US dollar index heads into the weekend threatening to give off its second reversal signal in the same week. Wednesday’s reversal did not work out so well, so traders may be reluctant to get sucked into a short dollar trade again around the same levels.
Like Wednesday, the index could put in an outside day, where the market makes both a higher high and a lower low than the prior day and closes near the low. A break of 85.82 on the March contract is needed to produce yet another outside day reversal. A decline in US equities may make this a tough one to pull off by the 4:00 close.
