The dollar’s perfect bounce off the top of its upper trend line has provided a short-term boost to US stocks, Gold and Commodities.
As the chart below shows, the US Dollar Index (which measures the US Dollar against a basket of foreign currencies, most notably the Euro) has been one of the main beneficiaries of the worsening debt crisis gripping the Eurozone.
Chart courtesy of Stockcharts.com
The dollar looks set to remain in the upward sloping trend channel that it established back in May, however in the short-term the greenback is likely to move lower.
Back at the beginning of May the Euro brought $1.48, today it only buys $1.31.
The stochastic indicator (circled), which measures price momentum, is beginning to turn down, and the flood of essentially free money that the ECB is offering to European banks may provide the Euro with a boost, at least for a short time.