U.S. Dollar Index Futures (DX) Technical Analysis – Has to Hold 97.700 to Sustain Rally

The U.S. Dollar is edging higher against a basket of major currencies early Wednesday as investors prepare for the U.S. Federal Reserve’s interest rate and monetary policy decisions, due to be released at 19:00 GMT. The Fed is widely expected to leave interest rates and policy unchanged.

The greenback is firming against the Euro, British Pound, Canadian Dollar and Swiss Franc. Gains are being limited by a slightly better Japanese Yen.

The dollar gave back some of its gains on Tuesday as fears over the spreading of the coronavirus subsided. Safe-haven buyers also lifted hedge positions after Treasury yields reversed higher.

At 08:04 GMT, March U.S. Dollar Index futures are trading 97.890, up 0.055 or +0.06%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 97.975 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at 96.815. This is highly unlikely, but there is room from a normal 50% to 61.8% retracement or a closing price reversal top.

The main range is 98.735 to 96.020. Its retracement zone at 97.700 to 97.379 is controlling the near-term direction of the index. It is currently support.

Daily Technical Forecast

Based on the early price action and the current price at 97.890, the direction of the March U.S. Dollar Index the rest of the session on Wednesday is likely to be determined by trader reaction to the steep uptrending Gann angle at 98.815.

Bullish Scenario

A sustained move over 98.815 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into Tuesday’s high at 97.975, followed by a downtrending Gann angle at 98.095. Sellers could come in on a test of this angle, but it’s also the trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 98.815 will signal the presence of sellers. The first downside target is the main Fibonacci level at 97.700. Watch for a technical bounce on the first test of this level.

A failure to hold 97.700 could trigger an acceleration to the downside with the next target the main 50% level at 97.380.