Dollar Index Breaks Through Resistance, Global Stocks Ready to Decline

The U.S. Dollar Index, a diversified basket of currencies paired against the American currency, has broken above rigid resistance. For the last month, the index had bounced off upward sloping support only to hit a wall of flat-top resistance on numerous occasions. Now, it appears as though the greenback may have broken out above this technical level of 86.10. We will look for a daily close above the designated threshold for confirmation of a possible bullish Dollar run.

Looking at the MSCI World Stock Index, we also notice that global equities are presently held firm at resistance. Could this be the start of another round of massive selling-hysteria? If so, another flight to safety could bode well for the U.S. Dollar as international and domestic investors flock to Treasuries.

[I]For questions or comments regarding this article please email Luis at lgil at fxcm dot com.[/I]