U.S. Dollar Index (DX) Futures Technical Analysis – Sustained Move Over 90.750 Indicates Return of Buyers

The U.S. Dollar finished lower against a basket of major currencies on Monday as riskier currencies got a boost from progress on COVID-19 vaccines and the possibility of a U.S. coronavirus relief plan. However, after hitting a more than 2-1/2 year low, the index bottomed and began to claw back losses after U.S. equity market started to retreat from record highs.

At 21:48 GMT, March U.S. Dollar Index futures are trading 90.655, down 0.269 or -0.30%.

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While investors were zeroing in on the vaccine headlines, negotiators in the U.S. Congress were nearing agreement on Monday on a massive government spending deal that would avoid a government shutdown and could serve as the vehicle to pass a fresh round of aid to a coronavirus-hit nation.

In other news, most of the major currencies were boosted early in the session by the vaccine news, but gave back some of those earlier gains as demand for risk dropped. The British Pound gained after the U.K. and European Union agreed on Sunday to continue Brexit talks. The Euro rose even as Europe ordered new coronavirus restrictions on activity including a strict lockdown in Germany.

[fx-image src=/2020/12/Daily-March-U.S.-Dollar-Index.jpg data-zoom-target=https://responsive.fxempire.com/cdn/n/n/_fxempire_/2020/12/Daily-March-U.S.-Dollar-Index.jpg originalWidth=1920 ratio=1.99]Daily March U.S. Dollar IndexDaily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 90.345 will signal a resumption of the downtrend. The main trend will change to up on a move through 92.730.

The minor trend is also down. A trade through 91.150 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is 91.150 to 90.345. Its 50% level or pivot is 90.750. Overtaking this level will indicate the short-covering is getting stronger.

The short-term range is 92.730 to 90.345. If the minor trend changes to up then look for the rally to possibly extend into its retracement zone at 91.540 to 91.820.

[fx-article-ad]Short-Term Outlook

The direction of the index this week could be determined by trader reaction to the minor pivot at 90.750.

Overtaking 90.750 could create an upside bias. If strong enough, we could see a test of the minor top at 91.150. Taking out this level will shift momentum to the upside. This could trigger a further rally into the short-term retracement zone at 91.540 to 91.820. Since the main trend is down, sellers could come in on a test of this area.

A sustained move under 90.750 will also indicate the presence of sellers. This could lead to a retest of Mondays low at 90.345. If it fails, we could see an acceleration into the July 7, 2018 main bottom at 89.790.

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