Nearly a month ago (March 30) I posted a blog titled "More Waves in the USDX", a look at what seemed to be the crossroads of the U.S. dollar index establishing a secondary (intermediate-term) uptrend on its weekly chart. Since then, the USDX has seen its weekly stochastics grow more bullish, indicating increasing bullish momentum, while the index itself has made little upward progress.
However, last week could change that. If you look closely you'll see the range between its weekly high and low was outside the previous week's range, with the USDX closing at 90.26, up 0.49 for the week. This would suggest a stronger likelihood of an upside move this coming week, possibly to the point of posting a new 4-week high beyond 90.60. After that resistance is likely at the spike high of 90.93 (week of February 26) before finally reaching retracement resistance at 91.93.
The effect on commodities could be limited by a variety of supply and demand issues, most notably bullish forward curves seen in the energy complex. However metals and the grain and oilseed complex are set up to see extended downward moves, with some of the pressure possibly tied to a stronger U.S. dollar.
To track my thoughts on the markets throughout the day, follow me on Twitter:www.twitter.com\Darin Newsom