US Dollar Index

U.S. Dollar Index (DX) Futures Technical Analysis – Testing Major Retracement Zone at 90.950 to 91.370

The U.S. Dollar reached a six-week high on Monday on weakness in the Euro, Swiss Franc and Japanese Yen amid views that the United States has an advantage in growing its economy and vaccinating its population against COVID-19.

The Euro was off 0.57% to 1.2069. The Japanese yen weakened, hovering around 105 to the U.S. Dollar, a level not seen since mid-November. Against the Swiss Franc, the U.S. Dollar was up 0.66% to .8967, its weakest level in two months.

On Monday, March U.S. Dollar Index futures settled at 90.975, up 0.406 or +0.45%.

The moves came as evidence pointing toward a stronger recovery from the coronavirus pandemic for the United States than for other countries.

In U.S. economic news, the latest economic survey showed U.S. manufacturing activity slowed slightly in January, while a measure of prices paid by factories for raw materials and other inputs jumped to its highest level in nearly 10 years, strengthening expectations inflation will perk up this year.

In Euro Zone news, the Euro weakened after Germany reported that retail sales plunged by an unexpected 9.6% in December after tighter lockdowns last year to curb the spread of COVID-19 choked consumer spending in Europe’s largest economy.

Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Monday when buyers took out the January 19 main top at 90.940. A trade through 90.030 will change the main trend to down.

The main range is 92.730 to 89.165. On Monday, the March U.S. Dollar Index tested its retracement zone at 90.950 to 91.370. This zone is controlling the near-term direction of the index.

The minor range is 90.030 to 91.050. Its 50% level or pivot at 90.540 is potential support.

The short-term range is 89.165 to 91.050. If the pivot fails as support then look for the selling to possibly extend into its retracement zone at 90.110 to 89.885.

Daily Swing Chart Technical Forecast

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

Bullish Scenario

A sustained move over 90.950 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the Fibonacci level at 91.370. This is also a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 90.950 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor pivot at 90.540.

Side Notes

The index is currently testing the most important retracement zone on the chart at 90.950 to 91.370.

Aggressive counter-trend sellers are going to try to form a potentially bearish secondary lower top on a test of this zone. Bullish trend traders are going to try to trigger a breakout over the Fibonacci level at 91.370.

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.