The dollar surged right out of the gate as New York traders sat down for the morning. The DXC made a run towards that 86.00 breakout level we've been watching, but came up short as the high print thus far was 85.92. The downside for Kiwi is a growing cause for concern as the 0.6535 level held again while the dollar was rallying. The lack of downside follow through in a rallying dollar environment tells us that if the dollar turns over, to be cautious of shorts jumping ship, which likely puts the rate back at 0.6590. So if 're still short, let's close it out to preserve the positive P/L from earlier this week.

Technically speaking, the DXC printed a nice 5-wave push higher with waves 1, and 5 being equidistant at the .786 retracement of the September 15 high. Two very important sources of resistance aligning just below a daily trend resistance level suggest we might see lower dollars for the time being.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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