U.S. Dollar Index (DX) Futures Technical Analysis – Strengthens Over 96.475, Weakens Under 95.885

The U.S. Dollar is trading slightly lower against a basket of major currencies on Thursday despite a steep rise in U.S. Treasury yields. The move by the dollar index is a little deceiving because the greenback is actually trading higher against many currencies except the Euro, which represents 57% of the index’s value.

The dollar is trading sharply higher against the risk-sensitive Australian and New Zealand Dollars, which are not a part of the index. The greenback is also up against the Canadian Dollar, British Pound and Swiss Franc, but struggling versus the Euro and Japanese Yen.

At 11:13 GMT, March U.S. Dollar Index futures are trading 96.170, down 0.012 or -0.01%. On Wednesday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) is trading $25.77, down $0.04 or -0.14%.

The U.S. Dollar is surging against risk-sensitive currencies including the Aussie and Sterling on Thursday, as worries about faster policy tightening by the Federal Reserve is denting risk sentiment.

Minutes from the Fed’s December meeting released on Wednesday were considered to be more hawkish than expected, weighing on riskier assets and supporting the U.S. Dollar and U.S. Treasury Bond yields.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 96.475 will signal a resumption of the uptrend. Taking out the main bottom at 95.575 will change the main trend to down.

The minor trend is also up. A trade through 95.885 will change the minor trend to down. This will shift momentum to the downside.

The index is currently struggling inside a series of minor 50% levels at 96.025, 96.200 and 96.315. It’s not going to go anywhere until it moves away from this area.

If the main trend changes to down then look for a test of the 50% support at 95.360 and a retracement zone at 95.050 to 94.610.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Thursday is likely to be determined by trader reaction to 96.200.

Bullish Scenario

A sustained move over 96.200 will indicate the presence of buyers. The first upside target is 96.315. This is followed by 96.475. This level is a potential trigger point for an acceleration to the upside with 96.895 the next potential upside target.

Bearish Scenario

A sustained move under 96.195 will signal the presence of sellers. The first target is 96.025. This is followed by the minor bottom at 95.885.

Taking out 95.885 will change the minor trend to down. This could trigger a sharp break into the main bottom at 95.575.