dollar dxy

U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 91.165, Weakens Under 90.950

The U.S. Dollar is trading higher on Monday after recovering from an early session setback. Traders sold the greenback on the open in reaction to a drop in U.S. Treasury yields. However, short-sellers starting covering their positions after yields began to rise.

If the bond market and risk assets start to stabilize after last week’s steep sell-offs then look for the U.S. Dollar to weaken.

At 10:38 GMT, March U.S. Dollar Index futures are trading 91.095, up 0.213 or +0.23%.

A weaker Euro and Japanese Yen contributed the most to the U.S. Dollar turnaround. Pressure has been growing on the European Central Bank to act against rising yields in the Euro Zone.

Not only is the ECB expected to lash out against rising yields, but all central bank policymakers are expected at some time this week to address the deepening divide between traders and central banks over the pace of the economic recovery.

We expect to see heightened volatility in the Forex market because the central banks are committed to protect their credibility. “If they want to maintain accommodative policy they have to act if markets look like they’re running away,” said Vishnu Varathan, head of economic and strategy at Mizuho Bank in Singapore.

Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however momentum is trending higher. A trade through 91.605 will change the main trend to up. A move through 89.675 will signal a resumption of the downtrend.

The minor trend is up. It changed to up earlier today when buyers took out the minor top at 91.050. This confirmed the shift in momentum.

The index is currently in a position to test a series of retracement levels at 91.165, 91.370 and a resistance cluster at 91.640 to 91.710.

On the downside, the first support is 90.950, followed by 90.410. This is the last support before the 90.385 to 90.100 retracement zone.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar index on Monday is likely to be determined by trader reaction to the 50% level at 90.950.

Bullish Scenario

A sustained move over 90.950 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the 50% level at 91.165. Overtaking this level will indicate the buying is getting stronger. This could trigger a further rally into 91.370.

Bearish Scenario

A sustained move under 90.950 will signal the presence of sellers. This is a possible trigger point for an acceleration to the downside with the next potential target zone at 90.410 to 90.385.

For a look at all of today’s economic events, check out our economic calendar.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.