U.S. Dollar Index (DX) Futures Technical Analysis – Supported by 90.385 – 90.100 Retracement Zone

The U.S. Dollar is edging higher against a basket of major currencies for a second session on Friday after finding support at a short-term retracement zone earlier in the week. Helping to boost the index is a weaker Euro, Japanese Yen and British Pound.

The early move suggests profit-taking is driving the index higher ahead of the weekend. Concerns that the U.S. stock market rally may be running out of steam is also sending a few buyers into the safe-haven greenback.

At 08:16 GMT, March U.S. Dollar Index futures are trading 90.470, up 0.057 or +0.06%.

Helping pressure the British Pound is a report that showed the U.K. economy suffered a record 9.9% slump in 2020.

Britain’s coronavirus-ravaged economy shrank 9.9% in 2020, the biggest annual fall in output since modern records began, but avoided heading back towards recession in the final quarter of the year, official figures showed on Friday.

Later on Friday, investors will get the opportunity to react to the latest data on Preliminary University of Michigan Consumer Sentiment and Preliminary University of Michigan Inflation Expectations. Both are due to be released at 15:00 GMT. Consumer sentiment is expected to have risen to 80.8 from 79.0. The Fed is also expected to release its Monetary Policy Report.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but momentum has been trending lower since the formation of the closing price reversal top on February 5.

A trade through 90.030 will change the main trend to down. A move through 91.605 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is also up. A trade through the new minor bottom at 90.235 will change the minor trend to down. This will confirm the shift in momentum.

The short-term range is 89.165 to 91.605. Its retracement zone at 90.385 to 90.100 is support. This zone stopped the selling at 90.235 on Wednesday.

The minor range is 91.605 to 90.235. Its retracement zone at 90.920 to 91.080 is the first potential upside target. Inside this zone is a short-term 50% level at 90.950.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the index on Friday will be determined by trader reaction to 90.385.

Bullish Scenario

A sustained move over 90.385 will indicate the presence of buyers. If this can create enough upside momentum then look for the rally to possibly extend into the resistance cluster at 90.920 to 91.080.

Bearish Scenario

A sustained move under 90.385 will signal the presence of sellers. This could trigger a break into the minor bottom at 90.235, followed by the Fibonacci level at 90.100.

For a look at all of today’s economic events, check out our economic calendar.