Sharp sell-offs in all major currencies triggered a strong surge in the March U.S. Dollar Index. Traders should look for a higher opening although the index is testing a major 50% level which could trigger a technical bounce.
The Dollar Index popped when the market failed to react to strong Chinese growth data. The bullish number should have fueled more demand for higher risk assets. When currencies hesitated, traders saw this as a sign of weakness and pounced on the dollar, driving it sharply higher.
Technically, the March Dollar Index futures contract reached the objective we had pinpointed earlier in the week. Based on the main range of 80.99 to 79.40, expectations were for a rally to at least 80.09 to 80.25. Overnight the index reached a high of 80.13 before profit-takers took control, triggering a slight intraday break.
Although there may be a slight pullback to an uptrending Gann angle at 79.90, there is still a strong bias to the upside. If momentum continues to build, then the index may take out the retracement zone and reach a downtrending Gann angle at 80.37.