U.S. Dollar Index Futures (DX) Technical Analysis – Trending Toward 99.205 Main Top

The U.S. Dollar finished marginally higher against a basket of major currencies on Friday with gains limited by a slight recovery in the heavily weighted Euro.  The U.S. Dollar also lost some ground versus the Canadian Dollar, British Pound and Japanese Yen. The greenback posted a small gain against the Euro, but it was a huge spike to the upside versus the Swiss Franc that carried the index higher for the session.

On Friday, March U.S. Dollar Index futures settled at 99.003, up 0.0045 or +0.05%.

The Euro bounced back against the dollar as U.S. stocks declined from record highs, though concerns about growth in the Euro Zone ae expected to keep weighing on the single currency.

The U.S. Dollar was pressured after a government report showed that last month’s closing sales represented the largest month-over-month decrease since March 2009.

The Commerce Department said on Friday that retail sales excluding automobiles, gas, building materials and food services were unchanged last month while data for December was revised downward to show so-called core sales up 0.2% instead of the 0.5% jump previously reported. Economists were pricing in a 0.3% rise.

The higher-yielding greenback was supported all week by traders looking for protection against the economic impact of the coronavirus on China’s economy and perhaps the global economy.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out the previous day’s high at 99.010. The main trend will change to down on a trade through 97.165. This is highly unlikely, but due to the prolonged move up in terms of price and time, it remains vulnerable to a potentially bearish closing price reversal top.

The minor trend is also up. A trade through 98.580 will change the minor trend to down. This will also shift momentum to the downside.

The current near-term range is 97.165 to 99.045. If there is a correction then its retracement zone at 98.105 to 97.885 will become the primary downside target.

Short-Term Outlook

The common theme on the daily chart since February 4 has been a daily higher high. Since a trend in motion is likely to remain in motion until acted upon by a stronger force, we’re going to assume buyers will be targeting 99.045 on Monday. If this move creates enough upside momentum then look for the buying to possibly extend into the next major top at 99.205.

A failure to make a new high, a higher-high, lower close or a break through Friday’s low at 98.875 will change the chart pattern. This will also signal that the selling is starting to become stronger, or the buying weaker.