U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 90.305, Weakens Under 89.945

The U.S. Dollar is inching higher against a basket of major currencies early Friday, rebounding from a near three-year low despite dovish comments from U.S. Federal Reserve Chair Jerome Powell the previous session and the announcement of President-elect Joe Biden’s monstrous fiscal stimulus plan Thursday evening. Both moves are potentially bearish for the greenback so the early strength is a bit of a surprise.

At 08:11 GMT, March U.S. Dollar Index futures are trading 90.300, up 0.085 or +0.09%.

Powell said in a live-streamed interview with a Princeton University professor on Thursday that the economy remains far from where the Fed wants it to be, and that he sees no reason to alter its highly accommodative stance “until the job is well and truly done.”

Meanwhile Biden released the details of his $1.9 trillion stimulus plan which failed to move the greenback very much in either direction.

On Friday, traders will get the opportunity to react to a slew of U.S. reports including retail sales, core PPI and consumer sentiment.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but momentum has been trending higher since the formation of the closing price reversal bottom on January 6 at 89.165.

A trade through 90.720 will change the main trend to up. A move through 89.165 will signal a resumption of the downtrend.

The minor trend is up. A trade through 89.890 will change the minor trend to down. This will shift momentum to the downside.

The first minor range is 90.720 to 89.890. The market is currently straddling its 50% level at 90.305.

The second minor range is 89.165 to 90.720. Its 50% level at 89.945 is support. This level stopped the selling on Wednesday at 89.890.

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 90.305.

Bullish Scenario

A sustained move over 90.305 will indicate the presence of buyers. If this move can create enough upside momentum then look for the rally to possibly extend into 90.720. Taking out this level will change the main trend to up and could trigger a surge into the resistance cluster at 90.950.

Bearish Scenario

A sustained move under 90.305 will signal the presence of sellers. This could trigger a break into 89.950 to 89.890.

If 89.890 fails then look for an acceleration into 89.165 of the near-term.