US Dollar Technical Forecast: Bulls Look to Take Back Momentum
US Dollar Talking Points:
- USD momentum looks for reversal from bulls
- 200-day moving average within reach to recapture bullish move
- ISM Services helps lift USD
US Dollar bulls are showing up at January support after the greenback recorded eight consecutive down days, helped in part by an upbeat ISM services beat. The US Dollar basket, now sitting at 9742.8, bounced off support from a consolidation range set through January. The bearish action through the past week has seen the USD smash through its 20,50, and 200-day moving averages as coronavirus fears rip through markets.
US Dollar Index and Daily Percent Change
Leading up to this week’s selloff, the US Dollar set a multi-year high on February 20th, overtaking April 2017 levels after a pivot off 2018 lows set in February of 2018. The leadup to recent highs from the February 2018 low accounted for a 13.21 percent gain in the USD Index, the largest since the 2014 rally of 27.23 percent.
US Dollar Basket (Weekly Chart)
The greenback may find further support near current levels, helped by recent points of earlier resistance. Downward momentum also may see a near-term reversal with the relative strength index showing near oversold conditions. However, the lower bound of price range over the past year would allow the USD to depreciate further downward before breaking new yearly lows.
A break below current levels would likely leave bears in charge until the next zone of resistance, possibly near January lows. Conversely, bulls will aim to retake momentum. A move up to challenge recent highs may manifest if price moves back above the 200-day moving average.
US Dollar Basket (Daily Chart)
--Written by Thomas Westwater, Intern Analyst for DailyFX.com
Contact and follow Thomas on Twitter @FxWestwater
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.