Technical Analysis – Dollar index futures to hold positive above ascending trendlines

Christina Parthenidou, XM Investment Research Desk

The US dollar index futures are set to close negative in the week after failing to retest the 28-month high of 99.30, with the RSI and the MACD foreseeing now a positive but softer short-term trading.

On the downside, the ascending trend-line drawn from the 95.34 trough, currently seen around 98.20, could be an ideal place to look for immediate support. If the price clears that barrier, the sell-off could pick up steam towards 97.52, which is the 38.2% retracement of the upleg from 94.60 to 99.30. Yet, a correction below 96.95, where the 50% Fibonacci meets the 200-day simple moving average (SMA), could prove a more serious violation as such a move would breach the more-than-a-year old dashed upward-sloping trendline, signalling sharper losses ahead.

Alternatively, another rebound on the shorter ascending line may pause near 98.94 before all attention turns to the 99.30 top. Should the latter prove easy to go through, a tougher wall could appear between 99.85 and 100.00.

Summarizing, the short-term bullish bias could fade if the dollar index falls below 98.20, while the positive outlook in the bigger picture would dim if the market drops under 96.95.