U.S. Dollar Index (DX) Futures Technical Analysis – Hovering Just Under Strong Resistance at 96.200 – 96.315

The U.S. Dollar is edging higher against a basket of major currencies in thin holiday trading early Friday. Although the other currencies are down across the board, the upside pressure in the index is being primary driven by the heavily-weighted Euro and Japanese Yen.

At 08:05 GMT, March U.S. Dollar Index futures are trading 96.075, up 0.111 or +0.12%. On Thursday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $25.73, up $0.04 or +0.14%.

The divergence between the hawkish U.S. Federal Reserve and the dovish European Central Bank (ECB) is weighing on the Euro. Expectations of higher U.S. interest rates are helping to widen the spread between U.S. Government bond yields and Japanese Government bond yields, making the U.S. Dollar a more attractive investment.

Additionally, the Dollar/Yen is hovering near a one-month high as investors looked beyond a surge in Omicron cases and favored riskier currencies.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 95.735 will signal a resumption of the downtrend. Taking out 96.395 will change the main trend to up.

The nearest resistance is a pair of 50% levels at 96.200 and 96.315.

On the downside, the first support is 95.360. This is followed by a retracement zone at 95.050 to 94.610.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Friday is likely to be determined by trader reaction to 96.065.

Bullish Scenario

A sustained move over 96.065 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into a pair of 50% levels at 96.200 and 96.315. These are the last potential resistance levels before the 96.395 main top.

Bearish Scenario

A sustained move under 96.065 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into 95.735. This is a potential trigger point for an acceleration into the main bottom at 95.500.