Seeing that the Euro comprises over half of the USDX, we are keeping a close eye on the currency. Ever since Draghi began his campaign of talking it down when it was near 1.40, the Euro has struggled to maintain any sort of bullish momentum for long. The reason has to do with interest rates - traders are convinced that the next move by the Fed in raising rates will be well ahead of any move by the ECB to raise rates in the Eurozone. Simply put, while the Fed is talking about curbing monetary liquidity measures over here in the US, the conversation in the Euro zone has been whether to become more aggressive over monetary liquidity measures over there. Such sentiment favors the Dollar over the Euro.
The currency is approaching a psychological round number support zone near 1.340. Failing to hold here would set it up for a further drop down towards 1.330.
The ADX is above the key 30 level and is continuing to rise indicating the presence of a strong trending move lower at this time.
One has to wonder if gold would be able to hold $1280 should the Euro fall accelerate. In my view the only thing currently holding gold higher is geopolitical tension. Were it not for those events ( and who knows how all this is going to end) gold would be lower, especially with the Dollar strength we are witnessing. Those events should continue to bring some safe haven buying into the yellow metal for the time being which will work to mitigate any sharp drops in price that could occur.
Meanwhile, the commodity sector ( overall ) continues to display weakness. Falling crude oil prices ( it has been unable to break out above former resistance near $105), falling grain prices ( for today), and weakness in some of the softs and hogs, are pulling it lower. Silver is bucking the lower trend in commodities today for some reason. Frankly, I do not know why nor do I care. That metal tends to live it in its own little world. There might be some copper/silver spreads being unwound which is benefitting it today at the expense of copper.
