Dollar has broken above month long down trend, will that be sufficient to push higher?

This week US dollar index, which is value of dollar against basket of currencies has broken above its month long down trend which saw the index drop from 100 mark to 93.2.

However, this may not be sufficient enough to push ahead, it requires fundamental support.

Why Dollar dropped in the first place?

• Dollar had the first hit from March FOMC meetings, which was extremely dovish highlighting the challenges posed by stronger to domestic economy and exporters.

• Weaker than expected economic dockets, pushed rate hike further at the end of the year and some market participants now believe first hike to come early next year.

• Higher longer term yields, especially across Euro zone pushed Euro higher, thus pushing dollar down.

• Dollar long position was way over stretched, a correction was long due.

What has changed?

• US Federal Reserve is still focused on upcoming data after first quarter disappointment and remain concern over stronger dollar.

• Market expectation of first rate hike remain pushed as of now, between December 2015 and January 2016.

• European yield has somewhat stabilized but still remains elevated, compared to prior. Possibility of further rise remains open.

• Dollar has given correction, just about 7% from its high, not enough for longer term buyers to increase positions.

So, other than this technical break, fundamental hasn't changed much. Focus now solely on economic dockets and if they continue to disappoint expect further selloffs in Dollar. Dollar index is currently trading at 95.05, down 0.5% today.

However, importance should be given to this up side break, suggesting reduction in short position and demands close monitoring.