Ominous Technical Set-Up For US Dollar Index

This morning's Dollar Index (DXY) weakness is pressing towards a test of last Thursday’s (12/03) Draghi-ECB low at 97.59.

If violated and sustained, this will increase the likelihood that the Dollar is in the process of establishing a March-December Double Top after its 27% advance off of the May 2014 low at 79.80.

One implication of a rest-corrective period for the Dollar is a reduction in the intense headwinds that have negatively impacted the commodity (CRB) space during the past 20 months.

That said, much depends on what the Fed does, and how it explains its policy action at next Wednesday's meeting, as well as the price action (weakness or recovery) in oil prices.

At the moment, DXY exhibits an ominous technical set-up, while CRB exhibits improving anecdotal evidence that it is at or nearing a significant low.

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Mike Paulenoff is founder of MPTrader.com, where he provides live intraday analysis and trade alerts covering the equity, commodity, and currency markets.