As financial markets are correlated with each other, it is worth looking at USD/CHF daily chart where a triangle pattern has been formed.
Usually a triangle finishes with E movement, and often the E ends around 61.8% Fibonacci level. If this is the case,
we may see a strong up movement on the currency pair. The triangle is over a 1000 pips wide and this is the mid term profit target. More importantly, as USD/CHF is inversely correlated to EUR/USD our assumption is that the latter pair may also move significantly lower. A further confirmation is needed, so we will watch the pair closely. If EUR/USD turns south the GBP/USD and AUD/USd should follow. In other words we expect strengthening of the USD dollar index, so USD/JPY should move higher and EUR/USD, GBP/USD and AUD/USD lower.
From the fundamental point of view, if Bank of Japan boost QE next month, Nikkei may move up. Also in Asia, according to Capital Economics, Chinese data are set to improve as well, as stimulus measures work their way trough. Eventually,
European Central Bank is ready to do whatever it takes to bring the economy up. These three factors support our view on the on the strengthening of US dollar index in the mid term.
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