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U.S. Dollar Index (DX) Futures Technical Analysis – 97.920 – 97.470 Controlling Weekly Direction

Based on last week’s price action and close at 98.081, the direction of the March U.S. Dollar this week is likely to be determined by trader reaction to the 50% level at 97.920 and the steep downtrending Gann angle at 97.815.
James Hyerczyk

The U.S. Dollar fell sharply against a basket of major currencies last week on increased expectations of a rate cut by the U.S. Federal Reserve. With the coronavirus reaching the U.S., investors have become increasingly worried it could trigger a U.S. recession. Furthermore, a steep plunge in U.S. equity markets drove investors into the safety of U.S. Treasury bonds, driving down yields. Falling yields made the U.S. Dollar a less-attractive investment.

Last week, March U.S. Dollar Index futures settled at 98.081, down 1.107 or -1.12%.

At the end of last week, Fed Fund futures were pricing in a 100% chance of a rate cut in March. Fed Chair Jerome Powell also suggested a rate cut was coming when he said the Fed would “act appropriately” if necessary. He also added the economy was doing fine.

Weekly March U.S. Dollar Index

Weekly Technical Analysis

The main trend is up according to the weekly swing chart. A trade through 99.815 will signal a resumption of the uptrend. The main trend will change to down on a trade through 96.020.

The main range is 96.020 to 99.815. Its retracement zone at 97.920 to 97.470 is the first downside target. This zone is controlling the near-term direction of the index.

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Weekly Technical Forecast

Based on last week’s price action and close at 98.081, the direction of the March U.S. Dollar this week is likely to be determined by trader reaction to the 50% level at 97.920 and the steep downtrending Gann angle at 97.815.

Bullish Scenario

A sustained move over 97.920 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into an uptrending Gann angle at 98.270.

Overcoming 98.270 will indicate the buying is getting stronger. This could trigger a rally into a downtrending Gann angle at 98.815.

Bearish Scenario

A sustained move under 97.815 will signal the presence of sellers. This could trigger a break into the Fibonacci level at 97.470. If this fails then look for the selling to possibly extend into the uptrending Gann angle at 97.145. This is a potential trigger point for an acceleration to the downside.

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