US Dollar Index (DX) Futures Technical Analysis – Trend Changed to Up, But Further Consolidation Possible

March U.S. Dollar Index futures closed higher on Monday, driven by a weaker Euro. Profit-taking drove the single-currency higher after a month-long rally. The dollar’s gains may have been limited by hawkish commentary from a Fed official.

While many Fed officials have said they expect three rate hikes this year, the recent downswing in the Dollar Index suggests investors are not fully convinced as inflation remains tame despite very tight labor market conditions.

Daily Swing Chart Analysis

The main trend is up according to the daily swing chart. The trend turned up on Monday when buyers took out the previous main top at 92.00. The new main bottoms are 91.51 and 91.47. The next two main tops come in at 93.56 and 93.83.

A major 50% to 61.8% retracement zone comes in at 92.24 to 92.72.

The short-term range is 93.56 to 91.47. Its retracement zone at 92.51 to 92.76 is the primary upside target.

Although the main trend changed to up, there wasn’t much momentum on the move. This suggests that the move was fueled by buy stops rather than aggressive investors buying strength. A stronger rally could develop if the index continues to consolidate while forming a support base.

Even with the change in trend, buyers face potential resistance at 92.24, 92.51 and the price cluster at 92.72 to 92.76.

The trigger point for an acceleration to the upside is 92.76.

The index may sit in a range the rest of the week, or buying may be tentative because of Friday’s major U.S. consumer inflation report.