Strong US Dollar Index Momentum Puts 99.970 on Radar

Investors flocked to the safe-haven U.S. Dollar on Friday after Russian invasion forces seized Europe’s biggest nuclear power plant. A blaze in a training building was extinguished and officials said the facility was not safe, while combat raged elsewhere in Ukraine in the second week of the assault launched by Russian President Vladimir Putin.

On Friday, the March U.S. Dollar Index futures contract settled at 98.671, up 0.880 or +0.89%. Also on Friday, the Invesco DB US Dollar Index Bullish Fund (UUP) finished at $26.37, up $0.21 or +0.78%.

The U.S. Dollar Index initially pared gains but then rallied further following data Friday that showed U.S. job growth surged in February. The report raised optimism that the economy could withstand tighter monetary policy.

Also supporting the dollar, investors expect the U.S. Federal Reserve to raise interest rates at its March 15-16 meeting for the first time since the coronavirus pandemic.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 98.945 will reaffirm the uptrend. A move through 95.650 will change the main trend to down, but were more likely to see an acceleration to the downside if 95.145 fails as support.

The nearest support is a major long-term Fibonacci level at 98.230. The index closed on the bullish side of this level, making it support.

Short-Term Outlook

We’re looking for the strong uptrend and momentum to continue as long as the March U.S. Dollar Index holds above the Long-Term Fibonacci Level at 98.230.

Taking out 98.945 will signal a resumption of the uptrend. If this move creates enough upside momentum then look for a surge into the March 25, 2020 main top at $99.970. This is a potential trigger point for a rally into 100.560 to 100.930.

The last main top at $100.930 is a potential trigger point for an acceleration to the upside with the March 20, 2020 main top at 102.990 the next major target.

A failure to hold 98.230 will not change the main trend to down, but it could trigger near-term weakness into a pair of 50% levels at 97.300 to 97.045.

The major support is the Long-Term 50% level at 96.500.