TALKING TECHNICALS: Dollar for dollar
Tracking the value of the greenback — and its effect on the rand
The last time the US dollar index was covered in this column was in March 2018. In that column, an important long-term support zone on the index was shown at 88 and it was suggested that the dollar weakness that had been evident over the 15 preceding months was likely to give way to a period of dollar strength. That analysis worked well, and the greenback has since strengthened. From March to July, the index moved from 88 to 95, for an 8% gain. The 95 level represents an important area of resistance, and has proven sticky over the past few weeks. It’s a significant resistance level, as it was the swing high in October 2017. The fact that the index has struggled at that level suggests the dollar is running into resistance against the basket of currencies that make up the index.
The biggest contributor to the index is the dollar-euro pair. The other currencies that make up the index — albeit with smaller weightings — are the Canadian dollar, pound sterling, yen, Swedish krona an...
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