FX.co ★ #USDX Analysis for December 18, 2013

The dollar index has not made much progress to the upside yesterday as all investors are waiting for the Fed's announcement today regarding the tapering possibility of the QE program. Volatility is at its lowest and that's why we expect volatility to rise tonight. Both short and long term trend remain down. Although we saw a couple days ago a small bullish sign, bulls will need more signs of strength for trend to reverse.

Even the MA has a neutral slope, something that supports our neutral stance. The current price action supports the possibility of an upward move towards 80.75 as prices seem to be supported for the time being. Don't forget that the decline has stopped right at the 61.8% Fibonacci retracement of the 79-81,50 upward move. Soon we will see if this low is an important one and if the trend reverses upwards with 82.50 target or it will make new lower lows.

The dollar index remains inside the long-term downward sloping channel. Breaking below 79, will push the index towards 74-75. Bulls need to break above 80.50-81 in order to challenge the red area zone resistance so that our 82.50 target will be feasible. Concluding, we remain neutral with a small upward bias, waiting for the Fed's announcements to bring in volatility.