The dollar slid to the lowest level this year against the euro before a U.S. consumer-confidence report that may reinforce concern economic growth is slowing.
The U.S. currency also headed for the biggest weekly loss since early December on speculation rising numbers of homebuyers with poor credit histories will fail to pay back loans. Signs that a housing slowdown is feeding through to consumption are also hurting the dollar. Global stocks fell today, adding to losses this month that may weigh on spending by individuals.
``The U.S. dollar is under pressure,'' said Hans Guenter Redeker, head of currency strategy at BNP Paribas SA in London. ``The U.S. economy is weakening'' and with ``the interest rate gap closing, obviously you want to have euros, not dollars.''
Let's look at the daily and weekly charts from Stockcharts. Here's the daily chart:
From a technical perspective, notice the latest rally didn't even hit resistance established in late January/early February. Instead the average reversed a bit above the 20-day SMA. Also notice that instead of breaking out once it crossed the 20-day SMA, the dollar index reversed. All of this simply says there is a lack of upward momentum in the dollar index.
Here's the weekly chart:
We're still firmly in a downtrend. In fact, as we approached the downtrend line we reversed with a strong bar which is in the circled area. All this means there is a strong bearish sentiment on the weekly chart.