The US Dollar Index (DXY) exploded higher Tuesday amid tensions in Korea and ongoing European sovereign debt concerns. The latest strength has now erased more than half the losses from the August highs. More importantly, the Powershares US Dollar Index ETF (UUP) has crossed above key resistance. Further dollar strength is favored towards the UUP's 24 region, while price-action remains near or above the important 23 handle.
The EUR/USD collapsed on the back of heightened risk aversion, confirming a secondary top or lower high. The pair has retraced 38.2% of gains off the June trough. Further weakness targets a Fibonacci extension level at 1.3265, while the 1.3440 region caps.
The GBP/USD broke below key 50-day moving average support to shift focus lower. The 1.5730 pivot is immediately targeted ahead of the 1.5660 region, while price-action remains below the 1.5837 swing low.
