Apart from why the dollar (DXY) abruptly reversed to the upside this morning, purely from my technical perspective this action is what I have been awaiting: some signal that all of the corrective-looking weakness off of the December 22 high at 78.45 into the January 13 low at 76.60 actually was a correction.

Today’s strength so far has the right look of the completion of a 3-week correction within a larger, intermediate-term recovery rally period for the DXY that is heading for a test and hurdle of 78.45 on the way to 80.00. If such a scenario is about to unfold, then spot gold prices – as well as the SPDR Gold Shares ETF (GLD) -- should experience currency headwinds that could pressure prices towards a retest of the December low at $1074, on the way to $1050/20.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.