U.S. Dollar Index (DX) Futures Technical Analysis – Strenghtens Over 96.355, Weakens Under 96.195

The U.S. Dollar finished nearly flat against a basket of major currencies on Monday after a blow to Democratic spending plans in Washington, but worries about the Omicron coronavirus variant kept risk currencies in check, making the dollar an attractive safe-haven asset.

On Monday, the March U.S. Dollar Index settled at 96.545, down 0.003 or -0.00%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $25.88, down $0.03 or -0.12%.

The greenback posted a strong gain last week despite giving up some of its advances on profit-taking. The rally was primarily supported by a hawkish U.S. Federal Reserve and safe-haven buying fueled by worries over the rapidly spreading Omicron virus.

On Monday, the index retreated from that high after U.S. Senator Joe Manchin, a moderate Democrat who is key to President Joe Biden’s hopes of passing a $1.75 trillion domestic investment bill – known as Build Back Better – said on Sunday he would not support the package.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on December 15.

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 up. 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 market is currently trading on the strong side of its pivot at 96.355, making it support.

The second minor range is 95.500 to 96.895. Its 50% level at 96.200 is additional support.

The short-term range is 93.810 to 96.895. If the main trend changes to down then its 50% level at 95.360 will become the next target.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to 96.355.

Bullish Scenario

A sustained move over 96.355 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a test of 96.895.

Bearish Scenario

A sustained move under 96.355 will signal the presence of sellers. The first target is 96.200. Taking out this level will indicate the selling is getting stronger and could trigger an acceleration into 95.810. This is the last minor support before the 95.500 main bottom.