Thu, Feb 09, 2023 @ 11:40 GMT
HomeContributorsTechnical AnalysisDollar Index Uptrend Intact, Bulls Watching For A Break Above 97.70

Dollar Index Uptrend Intact, Bulls Watching For A Break Above 97.70

In the last 30 hours alone, we’ve discussed the outlooks in EUR/USD, GBP/USD, and AUD/USD, but we haven’t reset the bigger picture outlook for the world’s reserve currency.

The US Dollar Index was able to shrug off the weaker-than-expected April Retail Sales report, but it finally succumbed to selling pressure on news that President Trump would delay tariffs on EU automobiles.

Turning our attention to the chart, the dollar index broke above previous resistance in the 97.70 late last month, but bulls were unable to maintain that move. Over the past three weeks, the index has formed a “descending wedge” pattern; despite its name, this pattern is generally seen as bullish, especially when it comes in the context of a longer-term uptrend, as we see today:

Furthering the optimistic perspective, the MACD indicator is holding in bullish territory above the “0” level, signaling generally bullish momentum. Crucially, the index’s average true range (ATR) has fallen 40% from its start-of-the-year highs. Because market volatility tends to be cyclical, the current low ATR reading could hint at a higher-volatility breakout in the coming days.

As it stands, the chart favors a bullish breakout in the buck and a potential run toward 98.50 or 99.00 from here. That said, a break below Monday’s low near 97.00 would signal that the bulls are losing momentum and could foreshadow drop toward the longer-term bullish trend line near 96.50 or lower.
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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