U.S. Dollar Index (DX) Futures Technical Analysis – Strong Upside Momentum Driving Market Toward 101.495

The U.S. Dollar surged against a basket of currencies on Tuesday as companies and investors chased the most liquid currency in the world as concerns about global economic slowdowns from the coronavirus continue to weigh on investor appetite for risk. The catalysts behind the price action were aggressive moves by the U.S. Federal Reserve, designed to prevent the financial system from seizing up.

At 20:25 GMT, June U.S. Dollar Index futures are trading 99.795, up 1.643 or +1.67%.

The Federal Reserve on Sunday slashed rates to zero and launched a new bond purchase program. Other central banks have taken similar measures but the moves have so far failed to stem liquidity strains and market panic.

Central banks have also cut pricing on their swap lines to make it easier to provide dollars to financial institutions around the world. But funding markets show continued stress in souring the greenback.

Essentially, the rally is being driven by extreme stress, making the U.S. Dollar a more attractive investor.

Additionally, the dollar was boosted by a jump in the benchmark 10-year Treasury yield. It popped over 1% on news the White House is weighing a fiscal stimulus package of more than $1 trillion to offset the negative economic impact form the coronavirus outbreak.

Rising yields also made the dollar a more attractive investment.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The trend changed to up when buyers took out the last main top at 99.440. The new main bottom is 94.530. The trend will change to down on a move through this level.

Short-Term Outlook

We’re looking for buyers to make a run at the steep uptrending Gann angle at 100.530 on Tuesday.

Overtaking this angle will put the index in an extremely bullish position with the next target the long-term 50% level at 101.493.

Even if upside momentum stalls, the market is still likely to attract buyers on a pullback into 97.530.