I follow the US Dollar and the EUR/USD (Euro/US Dollar pair) closely as although I don’t trade currencies often, a rising or falling Dollar usually affects the price of dollar sensitive assets such as gold & oil.

So far in pre-market, GLD (gold ETF) popped earlier with about half of the pre-market gains just recently faded but both GLD & GDX are still indicated to gap higher on what I expect is the fact they are anticipating a reversal in the recent near-term uptrend in the US Dollar ($USD, $DXY, UUP). I’m seeing some mixed signals on the near-term outlook for the Dollar. On one hand, the EUR/USD is now approaching the top of a significant support zone as shown on this 120-minute period chart while the pair also has bullish divergence in place on the 15-minute time frame. However, one thing giving me pause regarding a reversal in the EUR/USD (which would translate in a correction in the US Dollar which would be bullish for gold & oil) is the fact that the EUR/USD recent broke down from a bear flag continuation pattern, confirmed with an impulsive move out of the flag although that pattern has only played out about half-way to its measured target.

Bottom-line: I can make both a bullish & bearish near-term case for the dollar although I’d have to lean towards the bearish case (i.e.- EUR/USD bounces off support at or just below current levels). The net effect would be a correction in the US Dollar which would be bullish for gold & oil. I’m going to watch the currencies as well as GLD & USO closely for the first hour or so of trading & might decided to close out yesterday’s NUGT short, depending on what I see.