 Good morning and welcome to CMC Markets and this quick look at the currency markets now over the past a week or so We've seen the euro dollar hit its highest levels in nearly two and a half years since 2014 and Seen the dollar index post five successive monthly declines. We can see that in this Bloomberg chart here One two three four five five successive monthly declines worst runoff declines in the US dollar since 2011 here and we have to go back to 2003 to see when the US dollar index last posted Six successive monthly declines and I think this is really at the core of where we go to next with respect to Only euro dollar, but the dollar index as a whole I think it's instructive that even though euro dollar was able to push above its 200 week moving average on Friday It wasn't actually able to close Above it and I think in terms of why that happened We need look no further than the actual dollar index itself If we look at the dollar index and we look at it in the context of the 200 week moving average We can see here that it was able to hold above it Now that's important in the context that 58 percent of the dollar index is made up of the euro So in that context, I think to see further gains in euro dollar What we really need to see is a break below this level here on the dollar index the 200 week moving average But also a break of this low here that we saw In the middle of last year 2016 we still remain above that very key level and we also remain above the 200 week moving average So that gives me pause in terms of the prospects for further euro gains I think what is also instructive is when you're looking at a very close correlation of the type that we have With respect to euro dollar and the dollar index. It's also I think instructive If you look elsewhere in the context of whether or not we're going to see further dollar weakness or further dollar gains Certainly if we look at this chart here on the euro dollar, this is the weekly chart There's a very long up a shadow there which does appear to suggest that There is an awful lot of selling interest above the 118 119 level and ultimately We really do need to see another weekly close back above the 200 week moving average to suggest that We're going to see further gains there Friday's payrolls data has rather undermined undermined the case for a week a dollar, but more importantly, I think it's a good idea to also look at other US currency pairs to get an indication as to whether or not the momentum the momentum is there for a move below that 200 week moving average in the dollar index. So let's look at dollar Swiss dollar Swiss Is also quite instructive on the weekly chart. We've just posted a bullish weekly Reversal on the dollar Swiss We've also broken above the 200 week moving average and we didn't push below the 2016 lows So if you add if you add the dollar Swiss component of the dollar index to the euro Component of the dollar index you've got another another reason to be a little bit suspicious of Further dollar declines because certainly in the context of this dollar Swiss chart. We posted a bullish engulfing week At the end of this downtrend from the end of 2016 which does suggest that if we break above 98 Swiss francs that we could well push higher, but also if we look at the Australian dollar as well on a weekly chart We've also been unable to close above the 200 week moving average So all of these components lining up suggest to me that it's going to be very difficult To sustain a significant degree of dollar strength until such times as the 200 week moving average Breaks on the Aussie dollar breaks on the euro dollar and the dollar Swiss is unable to rally significantly After breaking above its 200 week moving average last week so In a nutshell, I think with respect to euro dollar We could well have seen the highs in the short term and in that context and looking at the daily chart as well We have potentially posted a very nice bearish reversal on the daily charts Which could well indicate that rather than going back towards 120. We could well be heading back towards 116 20 and the breakout level that we saw at the beginning or the middle of July so pay attention to those key levels They're going to be very very key in terms of the overall direction of the dollar over the course of the rest of this month Ultimately the likelihood of a six-monthly US dollar decline Is going to diminish given the fact that the last time we saw a similar decline was back in 2003 So you as a trader have to weigh up the odds of seeing another six Seeing another monthly decline relative to what are the odds of seeing a dollar rebound? So that's it for this week. Thanks very much for listening to Michael Houston talking to you from CMC markets