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US Dollar Upside Breakout Makes 96.020 – 95.755 New Support

By:
James Hyerczyk
Published: Jan 25, 2022, 12:20 UTC

A sustained move over 96.020 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 96.475.

US Dollar Index

In this article:

The U.S. Dollar is trading at its highest level against a basket of major currencies since January 10 on Tuesday as nervous investors flock to the safe-haven currency amid growing tensions between Russia and the West over Ukraine while awaiting the outcome of the U.S. Federal Reserve’s policy meeting.

At 11:52 GMT, March U.S. Dollar index futures are trading 96.175, up 0.274 or +0.29%. On Monday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $25.68, up 0.07 or +0.29%.

The main source of volatility so far this week is the news that the U.S. military will put about 8,500 troops on alert to be ready to deploy to Europe if needed. The move is designed to boost the confidence of jittery NATO allies in the face of a Russian military build-up near Ukraine.

Helping to provide the most support for the dollar index is the weaker Euro, which down about 0.48% while rapidly approaching its mid-December bottoms.

“Much greater exposure of European economies on the crisis does not make the Euro a particularly attractive vehicle to ride out the current storm,” ING analysts said.

In other news, the U.S. Federal Reserve begins its two-day policy meeting later today. On Wednesday, the central bank is expected to announce plans to raise rates and shrink its holdings of U.S. Treasury bonds and mortgage-backed securities. However, several banks are predicting a potentially hawkish surprise in the form of more aggressive rate hikes by the central bank before the end of the year.

Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 96.475 will change the main trend to up. A move through 94.610 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A move through 95.405 will change the minor trend to down.

The short-term range is 96.895 to 94.610. The index is currently trading on the strong side of its retracement zone at 96.020 to 95.755, making it support.

The new minor range is 94.610 to 96.215. Its 50% level at 95.415 is potential support.

The major support zone is 95.050 to 94.610.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to 96.020.

Bullish Scenario

A sustained move over 96.020 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 96.475. Taking out this level will change the main trend to up. This could trigger an acceleration to the upside with 96.895 the next major target.

Bearish Scenario

A sustained move under 96.020 will signal the presence of sellers. This could trigger a break into 95.755.

If the 50% level at 95.755 fails as support then look for the selling to possibly extend into 95.415 to 95.405.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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