U.S. Dollar Index Futures (DX) Technical Analysis – Strengthens on Breakout Over 97.700

The U.S. Dollar rose against a basket of major currencies on Friday with most of the gains fueled by weakness in the Euro, the heaviest weighted foreign currency in the index. The dollar also increased against the British Pound, Canadian Dollar and Swiss Franc.

The dollar slipped against the safe-haven Japanese Yen, giving up earlier gains, on increasing concerns that a spreading virus from China would curb travel and hurt economic demand.

On Friday, the March U.S. Dollar Index settled at 97.650, up 0.166 or +0.17%.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The next main top comes in at 98.045. The main trend will change to down on a move through the last main bottom at 96.815.

The main range is 98.735 to 96.020. Its retracement zone at 97.380 to 97.700 is controlling the near-term direction of the index. On Friday, the index inched through the upper level of the zone before settling inside it.

Short-Term Outlook

In order to continue the strong upside momentum, March U.S. Dollar Index futures are going to have to take out and sustain a rally over the Fibonacci level at 97.700.

A sustained move over 97.700 will indicate the buying is getting stronger. If this move generates enough upside momentum then look for a rally into a potential resistance cluster at 98.020 to 98.045.

Crossing to the strong side of the downtrending Gann angle at 98.110 will put the index in a bullish position. This is the last potential resistance angle before the 98.735 main top.

The inability to overcome 97.700 will signal the presence of sellers. This could drive the index into a downtrending Gann angle at 97.485, followed by the main 50% level at 97.378.

Side Notes

The market could rally early in the session on Monday if traders decide to buy the U.S. Dollar as protection against a global economic slowdown due to the spread of the coronavirus.

Furthermore, speculators snapped a six-week streak to add to their net long bets on the U.S. Dollar in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.