US Dollar Index (DX) Futures Technical Analysis – Downside Mometum Could Drive Market into 89.160

March U.S. Dollar Index futures are trading lower after a weak follow-through rally gave short-sellers an opportunity to retake control of the market. On Wednesday, the dollar posted a strong close in reaction to hawkish Fed minutes, however, today’s sell-off has nearly wiped out all of yesterday’s gains.

One can look at the current chart pattern as a temporary lull ahead of the next selling wave, or the building of a support base for the next rally. Traders who believe the Fed is behind the curve, are selling rallies. Traders who think a series of Fed rate hikes by the Fed will underpin the dollar are buying.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 90.455 will change the main trend to up. This could lead to a quick test of the next main top at 90.765. This is a potential trigger point for an acceleration to the upside.

A move through 88.15 will signal a resumption of the downtrend.

The short-term range is 88.150 to 90.170. If the sell-off continues then its 50% level at 89.16 will likely be tested.

The intermediate range is 92.360 to 88.150. Its retracement zone at 90.255 to 90.752 is the primary upside target.

The main range is 93.825 to 88.150. Its retracement zone at 90.99 to 91.66 is the major upside target. This zone is controlling the longer-term direction of the market.

Daily Swing Chart Technical Forecast

Based on the current price at 89.655 and the downside momentum, the initial target is 89.160. If this market is going to move higher over the near-term then aggressive counter-trend buyers are likely to come in on a test of this level.

If sellers are still in control then they should take out 89.160 fairly easily.

I don’t see a late session rally coming, but there is resistance at 90.17, 90.255 and 90.455.