U.S. Dollar Index (DX) Futures Technical Analysis – Next Move Hinges Upon Reaction to 96.355 – 96.200

The U.S. Dollar climbed against a basket of major currencies on Friday as traders retreated from riskier currencies amid talk of interest rate hikes by central bankers and concerns about the spread of Omicron cases.

The index was under pressure for a second session early Friday before making a dramatic rebound in the afternoon. The intraday reversal helped the index recoup all of the value it had lost on Thursday following a series of central bank policy statements.

On Friday, March U.S. Dollar Index futures settled at 96.548, up 0.533 or +0.55%. The Invesco DB US Dollar Index Bullish Fund finished at $25.91, up $0.18 or +0.70%.

Index components, the Euro and British Pound fell 0.6% and 0.5% respectively, after having booked gains the two previous days. Commodity-linked currencies, including the Australian and Canadian Dollars, also lost value as crude oil prices fell 2% on worries that Omicron variant will dampen demand. The dollar was flat against the Japanese Yen.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 96.895 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 95.500 will change the main trend to down.

The minor trend is down. A trade through 95.810 will change the minor trend to down. This will confirm the shift in momentum.

The minor range is 96.895 to 95.810. The index is trading on the strong side of its pivot at 96.355, making it support.

The short-term range is 95.500 to 96.895. Its 50% level at 96.200 is additional support.

The intermediate range is 93.810 to 96.895. If the main trend changes to down then its pivot at 95.360 will become the first target.

The main range is 93.200 to 96.895. Its retracement zone at 95.050 to 94.610 is the primary downside target. This zone is controlling the longer-term direction of the index.

Short-Term Outlook

The short-term direction is being controlled by the pivots at 96.355 and 96.200.

Look for the upside bias to continue on a sustained move over 96.355 and for a downside bias to develop on a sustained move under 96.200.