The technical picture of the Dollar index is very bearish. The index has not managed to stage any sizeable upward move above 80.60 and it continues to make lower lows and lower highs. The sideways consolidation from 79.95 to 80.50 has been broken downwards and we expect this downward move to continue lower as important support levels have been broken.

Important resistance is now the 80.40-50 area where the downward sloping trend line is now as seen in the above chart. The latest low at 79.95 was broken the the red horizontal line is now resistance. The ichimoku cloud has proven strong resistance for the index and prices got rejected and reversed lower.

On the weekly chart above, one can see how important the current levels are for the Dollar index. The upward sloping trend line from May 2011 is slightly broken and unless we see a reversal above 80 soon, we should expect the longer-term trend to push the index towards the low 70s price area. We are bearish as long as prices trade below 80.50