U.S. Dollar at one target level means be alert for possible turn in currencies

Back when the dollar was reacting upward for our lower Fibonacvi target, I posted that a logical target for the dollar index ($USD) would be to retest the 80 level. It was important before, and represents the area of the 50% retracement back to the high. This morning the dollar is testing slightly above the 80 level, so we must consider whether it's hitting target and what that may mean. The daily chart might be interpreted as 5 waves up and ready for a pullback down. More bearishly for the dollar, it might be that the dollar is capping off a pullback upward and ready to downtrend again. That's a big difference, isn't it!

It's reasonable therefore to be on alert for a turn of some proportion, small or large. This nay become a consolidation too. Indicators suggest that the dollar can turn but likely to test around somewhat rather than making an immediate change. Frankly I think it's a little early for the dollar to go into a sheer downtrend again. At the same time, it should react at least noticeably from approximately 80, and the nature of that should also be a clue. There are reasons to expect financial markets to continue to be roiled into March, so the dollar may either consolidate, or pullback and then resume uptrending, for another few weeks.

Some others have mentioned the $137 area as a target for the euro, which also fits as it's happening this morning. The euro might drop much lower; but here again, this can be an area where the euro starts going into a pullback (up) or consoludation before "deciding" whether to make another leg down into that same March time frame.

I've posted about the yen recently, and tweeted yesterday about the $XJY popping up again to that $111.49 Fibonacci level. This positions the yen to continue on up to multi-year highs. I can't guarantee it's enough to send the dollar index down that much, since the dollar index strength is also caused by weakness in the euro and other currencies. (I'm sure someone is making jokes about, beware of Greeks bearing bonds - but I'm not keen to laugh at others' pain). But the yen strength can contribute to the dollar at least pausing, and obviously doing more than that if the euro (and of course stock markets) start to find at least intermediate support soon.