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U.S. Dollar Index (DX) Futures Technical Analysis – Weakens Under 90.095, Strengthens Over 90.100

James Hyerczyk
·2 min read

The U.S. Dollar is trading lower against a basket of major currencies on Wednesday, but holding above its lowest level since January 13 reached on Tuesday. According to Reuters, the index is being pressured as the promise of extended easy monetary conditions globally boosted investor appetite for riskier assets.

At 09:03 GMT, March U.S. Dollar Index futures are trading 89.995, down 0.172 or -0.19%.

Money flowed from safe havens like the dollar toward currencies that are expected to benefit from a pick-up in global trade, and to countries like Britain that are bouncing back quickly from the coronavirus pandemic.

Helping to provide some support for the dollar index was a weaker Japanese Yen and Swiss Franc. The Swissy fell to its lowest level in three-months against the greenback.

Daily March U.S. Dollar Index
Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, yesterday’s closing price reversal bottom suggests there could be a shift in momentum to the upside.

A trade through 89.925 will negate the closing price reversal bottom and signal a resumption of the downtrend. A move through the next main bottom at 89.890 will reaffirm the downtrend.

A trade through 90.265 will confirm the closing price reversal bottom. This could trigger the start of a 2 to 3 day counter-trend rally.

The index is trading on the weak side of a retracement zone at 90.100 to 90.385, making this area potential resistance.

The minor range is 91.050 to 89.925. Its 50% level at 90.490 is also an upside target.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Wednesday is likely to be determined by trader reaction to 90.095 to 90.100.

Bearish Scenario

A sustained move under 90.095 will indicate the presence of sellers. This could lead to a retest of 89.925. Taking out this level will reaffirm the downtrend with 89.890 the next likely target.

The main bottom at 89.890 is a potential trigger point for an acceleration to the downside with 89.165 the next downside target.

Bullish Scenario

A sustained move over 90.100 will signal the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into a pair of 50% levels at 90.385 and 90.490.

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

This article was originally posted on FX Empire