US Dollar Index (DX) Futures Technical Analysis – Move Through 90.455 Changes Main Trend to Up

March U.S. Dollar Index futures are currently testing their highest level since February 12 after closing higher on Wednesday. Today is the fourth day up from the February 16 main bottom. The catalyst behind the strength is the minutes of the Federal Reserve’s January meeting which showed policymakers were more confident of the need to keep raising interest rates.

Traders are also responding to the Fed’s more upbeat take on inflation which is bolstering expectations for rate hikes. Additionally, the minutes showed that voting members as well as the wider group of policymakers had upgraded their forecasts for the economic outlook since December.

Finally, dollar index traders are also reacting to a rise in U.S. short-term interest rates futures which continued to reflect firm expectations that the Fed will raise rates three times this year.

Daily Technical Swing Chart Analysis

The main trend is down according to the daily swing chart, but momentum shifted to the upside with the formation of a closing price reversal bottom on February 16.

A trade through 90.455 will change the main trend to up. The next target is the January 18 main top at 90.765. A move through this level will reaffirm the uptrend.

A trade through 88.150 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The short-term range is 90.455 to 88.150. Its 50% level or pivot is 89.30. This level is support.

The intermediate range is 92.360 to 88.150. Its retracement zone at 90.255 to 90.752 is the next upside target. This may act like resistance on the first test.

The main range is 93.825 to 88.150. Its retracement zone at 90.99 to 91.66 is the primary upside target.

Daily Technical Swing Chart Forecast

Based on Thursday’s early trade, the direction of the dollar index the rest of the session is likely to be determined by trader reaction to the 50% level at 90.255.

Taking out 90.255 with conviction will signal the presence of buyers. This could lead to a labored rally with potential targets layered at 90.455, 90.752, 90.765 and 90.99.

The inability to overcome 90.255 will indicate the presence of sellers. This could generate the downside momentum needed to challenge the pivot at 89.30.

The pivot at 89.30 is a potential trigger point for an acceleration into 88.150.