The dollar has hung in there quite well after the run at the 85.00 support level in the US Dollar Index. In the last few days, the buyer's response to dollar bullish news has been more pronounced than the seller's response to bearish news. And combined with yesterday's look at EUR/USD's very average-sized intraday range breakout from 1.2800, it makes sense to start probing dollars on the long side.

The USD/CHF equivalent to the DXC's test of 85.00 support is the 1.2400-50 zone. 1.2400 held on the first test down and then sent price rocketing up to 1.2577 channel resistance. We have since re-approached the lows and found support from 786 retracement at 1.2440, and 1.0 projection at 1.2447, which led us back up to the parallel channel resistance. I am long a small piece of USD/CHF form 1.2505 following the Rumsfeld news (I honestly thought there would be a more dollar-positive response to the news of his resignation than we saw), and will be looking to add more on the break, and subsequent retracement to 1.2525. If done on the second piece, look to put your stops under the figure and get aggressive booking profits on test of the 1.2577 highs. I say get aggressive with booking profits because this is a highly contra-trend trade. But what we do have going for us, however, is first, the dollar is in a short-squeeze formation, and second, we remember from last night's trade how strong EUR/CHF was at 1.5940.

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

Disclaimer
The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.