DXY treading water post-Japan / before European data starts to flow

FXstreet.com (Barcelona) - The US Dollar Index (DXY) opened the session higher, but has come back down to the flat line – the action being driven thus far by the fluctuations in the Yen. Data from Europe soon to take command, though.

Data in Europe to drive the action early Tuesday

Now that the net results of the Japanese data are known (DXY now flat on the session after the initial bout of Yen weakness provided the early boost), traders will be looking to see how the euro trades against the Dollar once German CPI and Economic Sentiment and EuroZone Industrial Production and Economic Sentiment are released at different points Tuesday morning.

Technical outlook for the DXY

Technicians have been saying the downside trading target for DXY is likely 80.51 – 80.66 after 81.13 support was broken last week. Once the anticipated low is established, technicians are calling for a sharp move to the upside with an ultimate target of at least 85.00 – which will likely correspond with the Fed’s tapering program. Shorter-term resistance for DXY comes in at the 7/31 closing low at 81.45 and is backed up by the 7/24 peak at 82.42.