U.S. Dollar Index Futures (DX) Technical Analysis – Weakens Under 97.170, Strengthens Over 97.380

The U.S. Dollar surged against a basket of currencies on Friday on the back of a series of better than expected U.S. economic data releases that make a near-term cut in interest rates unlikely. U.S. Gross Domestic Product nudged up in the third quarter, the government confirmed on Friday, and there are signs the economy maintained the moderate pace of expansion as the year ended, supported by a strong labor market. Consumer spending was stronger than previously reported, and there were upgrades to business spending.

On Friday, March U.S. Dollar index settled at 92.274, up 0.319 or +0.33%.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of a closing price reversal bottom on December 13 at 96.295.

The main trend will change to up on a trade through 98.045. A move through 96.295 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The main range is 94.665 to 98.735. Its retracement zone at 96.700 to 96.220 is major support. This zone stopped the selling on December 13, triggering the start of a five-day counter-trend rally.

The short-term range is 98.045 to 96.295. Its retracement zone at 97.170 to 97.380 is potential resistance. This zone is currently being tested. Sellers are going to try to form a secondary-lower top. Counter-trend buyers are going to try to breakout above this zone.

A minor range may be forming between 96.295 and 97.350. Its 50% level at 96.825 is a potential downside target.

Daily Swing Chart Technical Forecast

Based on Friday’s close at 92.274, the direction of the March U.S. Dollar Index on Monday is likely to be determined by trader reaction to the 50% level at 97.170 and the Fibonacci level at 97.380.

Bearish Scenario

A sustained move under 97.170 will indicate the presence of sellers. If this move is able to create enough downside momentum then look for the rally to possibly extend into the minor pivot at 96.825.

Bullish Scenario

A sustained move over 97.380 will signal the presence of buyers. This could trigger a breakout to the upside. But perhaps not this week because of the low volume and the holiday-shortened week.