U.S. Dollar Index (DX) Futures Technical Analysis – Traders Betting on Hawkish Fed Minutes

The U.S. Dollar is edging up against a basket of major currencies on Wednesday, shortly before the release of the minutes of the last Federal Reserve policy meeting. Nonetheless, the market remains in a position to challenge a six-week high tested last Friday on the back of strong economic data.

At 16:56 GMT, March U.S. Dollar Index futures are trading 104.270, up 0.158 or +0.15%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) is at $28.23, up $0.05 or +0.18%.

Traders are hoping the minutes of the Fed’s latest meeting on Wednesday shed some light into policymakers’ plans.

Bullish dollar traders are currently riding a wave of strong upside momentum using the market’s repricing of higher interest rates from the Fed as the fundamental catalyst.

As of Tuesday’s close, traders were projecting the Fed’s main interest rate would rise to peak around 5.35% in July, according to Refinitiv data based on derivative market pricing.

At the start of February, expectations were for a peak just below 5%. Recapping recent activity from the central bank, the Fed has raised rats to a range of 4.5% to 4.75%, from 0% to 0.25% as recently as March 2022.

Daily March U.S. Dollar Technical Analysis

The main trend is up according to the daily swing chart. A trade through 104.605 will signal a resumption of the uptrend. A move through 100.680 will change the main trend to down.

The minor trend is also up. A trade through 103.685 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is 104.605 to 103.685. The market is currently trading on the strong side of its pivot at 104.145, making it support.

The main support is a long-term Fibonacci level at 103.664. The major upside target is a long-term 50% level at 105.725.

Daily March U.S. Dollar Technical Forecast

Trader reaction to the minor pivot at 104.145 is likely to determine the direction of the March U.S. Dollar Index into the close on Wednesday.

Bullish Scenario

A sustained move over 104.145 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 104.605. Taking out this level will put the index in a position to possibly extend the rally into the long-term 50% level at 105.723.

Bearish Scenario

A sustained move under 104.145 will signal the presence of sellers. This could trigger a break into 103.664. If this level fails as support then look for the selling to possibly extend into 103.090, followed by 102.643.