The Dollar index looks like it is too weak to make an upward break above the short-term resistance at 80.70. Both a downward sloping trend line and the MA pose strong resistance for the index. As long as the index trade below 80.70 we feel it is more probable to see fall towards 80.40 or even 80.10 if 80.40 support fails.

Short-term trend is down and we expect the index to trade today between 80.70 and 80.40. Fed decision tonight will bring volatility in the markets and we could see the index move towards 80.10 or even 81 depending on what decisions the Fed takes regarding the QE program and potential tapering.

The daily chart shows us the big triangle that was broken upwards. However, the index was rejected at the 81.50 price level and turned back down to back test the broken triangle and retest the two MA that have crossed. Our view favors long positions as we believe that it is more probable to see an upward move towards 82 than a downward break towards 79.50. Stop for bulls is 80.10 and stop for bears is 81.35.