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James Hyerczyk

The U.S. Dollar surged against a basket of major currencies on Friday, putting it within striking distance of its October 1, 2019 main top at 98.735. The catalysts driving the greenback higher were safe-haven demand due to concerns over the economic impact of the corona virus, weaker-than-expected German industrial production and a better-than-expected U.S. jobs report.

On Friday, March U.S. Dollar Index futures settled at 98.571, up 0.190 or +0.19%.

The dollar was underpinned against a basket of major currencies early in the session as traders continued to express concerns over the impact of the corona virus on the global economy, particularly China.

The greenback was further boosted after the Euro fell to its lowest since October after German Industrial Production recorded its biggest decline in a decade in December.

The dollar surged during the U.S. session after data showed U.S. nonfarm payrolls increased by 225,000 jobs last month. Economists polled by Reuters had forecast payrolls would rise by 160,000 jobs in January.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed early in the week when buyers took out a pair of main tops at 98.005 and 98.045. The main trend will change to down if sellers take out 97.165.

The nearest support is a retracement zone at 97.700 to 97.380. Holding above this zone is helping to generate the upside bias.


Daily Swing Chart Technical Forecast

Given the prolonged move up in terms of price and time and the strong momentum into the close on Friday, the direction of the March U.S. Dollar Index on Monday is likely to be determined by trader reaction to Friday’s close at 98.571.

Bullish Scenario

A sustained move over 98.571 will indicate the presence of buyers. The first upside target is the October 1, 2019 main top at 98.735. This is followed closely by 98.890. This price level is a potential trigger point for an acceleration to the upside with 99.205 the next likely upside target.

Bearish Scenario

A sustained move under 98.571 will signal the presence of sellers. The first target is a 50% level at 97.885. This is followed by the major Fibonacci level at 97.700.

Side Notes

Taking out 98.600 then turning lower for the session will put the index in a position to form a closing price reversal top. This chart pattern won’t change the main trend to down, but it could lead to a 2 to 3 day correction.

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