The US dollar index rose quickly over the past few trading days. Other major currencies like the EURO, Pound, Aussie etc weakened against the dollar and I am tempted to short them. However I am hesitant to do so as I noticed that the dollar index is approaching a resistance zone (see the red box in the attached chart). If the dollar index rally falters at resistance, other major currencies may cease to weaken and shorting them will then prove to be a bad decision. If the dollar index slices through resistance easily, I may miss some opportunities but I rather play safe and wait.
To me, the only currency that is moving in a clear direction now is the Japanese Yen, which I mentioned in a previous post.
If the dollar index pushes through resistance and continues its climb, EURO and AUSSIE would become prime candidates to short. I will watch the dollar index closely and provide updates in due course.