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

The U.S. Dollar is trading flat against a basket of major currencies early Wednesday with the price action basically mirroring the movement in the heavily weighted Euro. Volume is on the light side for a second straight session, suggesting the major players have already started to move to the sidelines ahead of Friday’s bank holiday.

At 02:57 GMT, March U.S. Dollar Index futures are trading 96.465, down 0.024 or -0.02%. On Tuesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $25.86, down $0.01 or -0.06%.

Dollar traders haven’t been paying too much attention to the volatility in Treasury yields this week, but with yields relatively high and the Fed expected to raise rates at least three times in 2022, the dollar index remains within striking distance of a 16-month high.

Later today, dollar traders will get the opportunity to react to a number of reports on Wednesday including Final GDP, Consumer Confidence and Existing Home Sales. With the Fed decision already in, these reports are going to have to miss in a big way in order to move the greenback much.

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 95.50 will change the main trend to down.

The minor trend is also 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 index is currently trading on the strong side of its pivot at 96.355, making it support.

The short-term range is 96.845 to 95.500. Its 50% level at 96.200 is another potential support level.

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 next target.

The retracement zone controlling the near-term direction of the index is 95.050 to 94.610.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Wednesday is likely to be determined by trader reaction to 96.355 and 96.195.

Bullish Reaction

A sustained move over 96.355 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into 96.895, followed by the 16-month high at 97.120.

Bearish Reaction

A sustained move under 97.195 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possible extend into the minor bottom at 95.810, followed by the main bottom at 95.500 and the 50% level at 95.360.