U.S. Dollar Index Futures (DX) Technical Analysis – Continued Upside Momentum Could Drive Index into 97.170 to 97.380

The U.S. Dollar finished higher against a basket of major currencies on Tuesday, primarily driven by a steep slide in the Sterling after British Prime Minister Boris Johnson put a no-deal exit from the European Union back on the table. Helping to limit gains was a slightly better Euro and Canadian Dollar. The greenback also lost ground to the safe-haven Japanese Yen and Swiss Franc.

On Tuesday, March U.S. Dollar Index futures settled at 96.777, up 0.197 or +0.20%.

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 96.295 will signal a resumption of the downtrend. The main trend will change to up on a move through 98.045. This is highly unlikely, however, there is room for a normal retracement of the recent sell-off.

The minor trend is also down. A new minor bottom was formed at 96.295. A trade through 97.400 will change the minor trend to up and signal a shift in momentum to the upside.

The main range is 94.665 to 98.735. Its retracement zone is 96.700 to 96.295. This zone is major support. It stopped the selling on December 13 at 96.295. This area is also controlling the longer-term direction of the index.

The short-term range is 98.045 to 96.295. Its retracement zone at 97.170 to 97.380 is the primary upside target.

Daily Technical Forecast

Based on Tuesday’s price action and the close at 96.777, the direction of the March U.S. Dollar Index on Wednesday is likely to be determined by trader reaction to the main 50% level at 96.700.

Bullish Scenario

A sustained move over 96.700 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a short-term rally into 97.170 to 97.380. Since the main trend is down, sellers are likely to come in on a test of this area.

Bearish Scenario

A sustained move under 96.700 will signal the presence of sellers. The first target is a minor pivot at 96.580. This is followed by the minor bottom at 96.295, followed closely by the main Fibonacci level at 96.220. The latter is the trigger point for an acceleration to the downside.