US Dollar Index

U.S. Dollar Index (DX) Futures Technical Analysis – Trend Changes to Down on Trade Through 89.890

The U.S. Dollar was trading lower late Thursday with investors tending to favor higher-yielding currencies, as a slew of better-than-expected U.S. economic data and continued optimism about a massive stimulus package spurred hopes of a recovery in the world’s largest economy.

On Thursday, U.S. data showed an economy slowly getting some traction, with slightly better-than-expected initial jobless claims, upbeat housing starts data, and a higher factory index for the mid-Atlantic region.

At 19:19 GMT, March U.S. Dollar Index futures are trading 90.180, down 0.289 or -0.32%.

The greenback dropped versus currencies tied to commodity prices such as the Australian, Canadian and New Zealand Dollars. The Euro also gained, but that was attributed to the weaker U.S. Dollar as European Central Bank President Christine Lagarde warned about a renewed surge in COVID-19 infections and the prospect of prolonged restrictions that could challenge the region’s economic outlook.

Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. It turned up last Friday when buyers took out the previous main top at 90.720. However, the lack of follow-through to the upside suggests the change in trend may have been triggered by short-covering or buy stops rather than actual traders going long.

A trade through 90.790 will signal a resumption of the uptrend. The main trend will change to down on a move through 89.890.

The minor range is 89.890 to 90.790. Its 50% level at 90.340 is new resistance.

The short-term range is 89.165 to 90.790. Its 50% level at 89.980 is potential support. It’s also the last potential support before the 89.890 main bottom.

The main range is 92.730 to 89.165. Its retracement zone at 90.950 to 91.370 is the primary upside target. This zone is controlling the near-term direction of the index.

Short-Term Forecast

The direction of the March U.S. Dollar Index into the close will be determined by trader reaction to the 50% level at 90.340.

Bearish Scenario

A sustained move under 90.340 will indicate the presence of sellers. This could lead to a test of 89.980. Taking out this level will indicate the selling is getting stronger. A move through the main bottom at 89.890 will change the main trend to down. This could trigger an acceleration to the downside with the next target the low of the year at 89.165.

Bullish Scenario

A sustained move over 90.340 will signal the presence of buyers. If this generates enough upside momentum then look for the rally to possibly extend into 90.790, followed by the short-term retracement zone at 90.950 to 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.