Technical Analysis - Trading: 2014-10-31

Today we consider the currency index &VSUSD_Index, composed by the Personal Composite Instruments - PCI technology. The index is designed to show the US dollar price movement against other segment of the Forex market. Acting as a systematic indicator of the FX market, we use a portfolio of the most liquid currencies: EUR(12.7%) + JPY(14.5%) + GBP(17.5%) + CHF(19.1%) + AUD(18.1%) + CAD(18.1%). The price of each currency in the portfolio is expressed in USD. The weights are determined on the basis of the currency liquidity against the volume of international bank circulation. For more detailed information and advantages regarding the US dollar index click here.

Note that the index reaction to the fundamental events of the US economy is very obvious and stable: the index forms a stable trend channel, while it is less susceptible to the fundamental events of other currencies. Let us remind you that on Wednesday the Federal Open Market Committee (FOMC) issued the statement, confirming the QE3 completion in late October. This decision will result in a gradual volume reduction of the long-term government bonds purchases. However, the interest rates are planned to be kept at the level of 0-0.25% per annum in order to maintain the economic growth with the help of available commercial loans. The FOMC statement resulted in significant dollar consolidation against the most liquid currencies. This fact allows counting on the D1 bearish trend continuation of the &VSUSD_Index.