U.S. Dollar Index (DX) Futures Technical Analysis – Testing Main Retracement Zone at 90.385 to 90.100

The U.S. Dollar is inching higher against a basket of major currencies early Thursday. Volume is on the light side because of a holiday-thinned Asian session.

Despite the early strength, the greenback remains pinned near its lowest level since January 27, reached on Wednesday. Helping to keep a lid on prices is softer U.S. inflation data and another Federal Reserve promise to keep interest rates low.

At 05:30 GMT, March U.S. Dollar Index futures are trading 90.385, up 0.022 or +0.02%.

U.S. core inflation last month was zero, data showed on Wednesday, against market expectations of 0.2%.

In a speech, Fed Chair Jerome Powell focused on still-high unemployment and reiterated that the central banks new policy framework could accommodate annual inflation above 2% for some time before hiking rates.

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the closing price reversal top on February 5.

A trade through 91.605 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through 90.030. The downtrend will be reaffirmed if 89.890 fails. This is a potential trigger point for an acceleration to the downside.

The main range is 89.165 to 91.605. The index is currently straddling its retracement zone at 90.385 to 90.100. Trader reaction to this zone could determine the near-term direction of the market.

On the upside, the first potential upside target is a resistance cluster at 90.920 to 90.950.

The early price action suggests the direction of the index on Thursday is likely to be determined by trader reaction to the main 50% level at 90.385.

Bullish Scenario

A sustained move over 90.385 will indicate the return of buyers. If this move is able to generate enough upside momentum then watch for the market to grind into 90.920 to 90.950 over the short-run.

Bearish Scenario

A sustained move under 90.385 will signal the presence of sellers. This could trigger a break into yesterdays low at 90.235, the short-term Fibonacci level at 90.100, followed by a pair of main bottoms at 90.030 and 89.890.