Well off the lows of the overnight session, weakness in the greenback continues as the dollar index appears close to resistance. The index has, in the past two weeks, bounced off support at approximately 75.9 which led to a move back to the early August lows in the 77.4 region. Since peaking Friday at 77.475, the index has since pulled back amid optimism swelling from European PMI data, along with the first monthly expansion in the US service sector in a year. Other stressers on sentiment include bank upgrades issued by Goldman Sachs as third quarter earnings season is due to begin, while energy commodities fall more than one percent. Meanwhile, equities have seen a mixed reception but have since moved into positive territory with gains of more than a third of one percent.
Looking ahead, it will be important to watch the dollar index for further sign of strength or a return to weakness. Breaking resistance at 77.4 could step the greenback to climb as high as the 61.8% retracement of the overall move from the March 2008 low to the peak set in March 2009.
[B]Dollar Index Historical Chart[/B]
