U.S. Dollar Index Futures (DX) Technical Analysis – Trade Through 98.585 Confirms Closing Price Reversal Top

The U.S. Dollar retreated from a four-month high against a basket of major currencies on Tuesday as risk appetite improved, and after Federal Reserve Chairman Jerome Powell adopted an upbeat view of the U.S. economy.

Comments by Powell on Tuesday affirmed the view that the U.S. central bank is unlikely to change interest rates in the near term. With risks like trade policy uncertainty receding and global growth stabilizing, Powell signaled he saw no reason to adjust U.S. interest rates, unless new developments cause a “material reassessment” to the current outlook.

On Tuesday, March U.S. Dollar Index futures settled at 98.594, down 0.120 or -0.12%.

The price action suggests investors were looking for Powell to be more upbeat about a rate cut, but were disappointed when he presented the same dovish tone he’s been pushing for months.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum may be getting ready to shift to the downside with the formation of a closing price reversal top on Tuesday.

A trade through 98.855 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 98.585 will confirm the closing price reversal top. This won’t change the trend to down, but it could lead to a 2 to 3 day correction or a 50% to 61.8% retracement of the last rally.

The minor range is 97.165 to 98.855. If the closing price reversal top is confirmed then look for a possible break into its retracement zone at 98.010 to 97.800 over the near-term.

Daily Swing Chart Technical Forecast

Based on yesterday’s price action, the direction of the March U.S. Dollar index on Wednesday is likely to be determined by trader reaction to yesterday’s low at 98.585.

Bearish Scenario

A trade through 98.585 will confirm the closing price reversal top. If this move creates enough downside momentum then look for a possible 2 to 3 day break into 98.010 to 97.800.

Bullish Scenario

A sustained move over 98.585 will indicate the presence of buyers. The first upside targets are yesterday’s high at 98.855, followed by another main top at 98.890. This is a potential trigger point for an acceleration to the upside with 99.205 the next major upside target.