Interesting times for the US Dollar.  It's major trend is clearly upwards and over the past couple of weeks it has enjoyed a broad period of fresh strength, but with the US Dollar down near the bottom of our current rankings, we've been looking at the possibility of a lower top developing and setting off a further multi-week corrective retreat, before eventually being ready to return to strength in a month or two.

What concerns us now is the speed and extent of this latest US Dollar strength.  At the current time, it is displaying more impulsive rather than corrective features and for this reason we have typically lowered our bearish US Dollar targets to above the recent lows, in the event that a setback proves to be short-lived and corrective, rather than the start of another multi-week decline (as had originally been thought).

In my 20th May blog I highlighted broad weakness for the Japanese Yen.  This was well before USD/JPY accelerated upwards through key multi-month tops at 121.84 / 121.99 and the 25 year downtrend line to set up the current advance in the direction of the 2007 peak at 124.14.  This begs the question: Could the US Dollar be about to break to new long-term highs against a range of other major Currencies too?

At this time it is too soon to tell whether the US Dollar is about to embark of a further broad sizeable advance.  USD/JPY is approaching key historical resistance which more-or-less coincides with the top of a multi-month bull channel and price projections based on recent action.  This suggests the upside may actually now be quite limited with the risk of a setback before long.  If such a reversal were to be more broadly US Dollar based then the possibility of a further multi-week setback (as originally thought) would become more likely.  

The next few days (and maximum of a week) would appear to be important in terms of the US Dollar's multi-week direction.  At this time we remain wary of an impending lower top and sharp reversal against many of the other major currencies, but in the event of this failing to happen, then the likelihood will grow for a sustained further advance.

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