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U.S. Dollar Index (DX) Futures Technical Analysis – Lower after Powell Delivers Less-Hawkish Message

By:
James Hyerczyk
Updated: Feb 8, 2023, 09:22 UTC

Powell may not have sounded hawkish enough for some dollar bulls, but Treasury yields rose after his speech, helping to limit the greenback’s losses.

US Dollar Index

In this article:

The U.S. Dollar is inching lower against a basket of major currencies early Wednesday after posting a dramatic and potentially bearish closing price reversal top the previous session.

After touching a one-month high on Tuesday, traders took profits after Federal Reserve Chair Jerome Powell failed to offer fresh signs of a hawkish pushback against a resilient labor market in the United States, leading investors to bet that interest rates may not rise much further.

At 06:25 GMT, March US Dollar Index futures are trading 103.175, down 0.123 or -0.12%. On Tuesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $27.90, down $0.05 or -0.18%.

Reuters reported that in a question-and-answer session before the Economic Club of Washington on Tuesday, Powell acknowledged that interest rates might need to move higher than expected if economic conditions remained strong but reiterated that he felt a process of disinflation was underway.

Powell may not have sounded hawkish enough for some dollar bulls, but Treasury yields rose after his speech, helping to limit the greenback’s losses.

Daily March U.S. Dollar Index

Daily March US Dollar Technical Analysis

The main trend is up according to the daily swing chart. However, momentum will shift to the downside on a trade through 102.870. The move will confirm Tuesday’s closing price reversal top.

A trade through 103.850 will negate the chart pattern and signal a resumption of the uptrend. A move through 100.680 will change the main trend to down.

The nearest resistance is a long-term Fibonacci level at 103.664. Short-term support comes in at 103.090.

The new minor range is 100.680 to 103.850. Its pivot at 102.265 is another downside target.

Daily March US Dollar Technical Forecast

Trader reaction to 103.090 is likely to determine the direction of the March US Dollar Index on Wednesday.

Bullish Scenario

A sustained move over 103.090 will indicate the presence of buyers. If this generates enough upside momentum then look for a test of 103.664 and 103.850. The latter is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 103.090 will signal the presence of sellers. Taking out 102.870 will confirm the reversal top. This could create the downside momentum needed to challenge the minor pivot at 102.265.

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

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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