U.S dollar index long-term technical analysis

The coronavirus pandemic has not been resolved yet as vaccination started this year. Traders and investors will monitor closely the first-quarter data on vaccination and economic ground. If there is improvement then recovery should continue the rest of the year. However, if vaccination result is disappointing then we might see the pandemic continue and crumbling stock market.

U.S dollar index currently under pressure as Joe Biden’s stimulus plan roll-out. However, the index might have a chance to reverse its bearish direction as U.S Treasury yield continues to increase. If the increase becoming more aggressive then there is the time when the Fed will start tapering to match the interest-rate increase.

New Month

Monthly chart

On the monthly chart, the U.S dollar index formed a bullish close in January trading month. There was a bullish breakout this month but the index lost momentum and it has traded back below the opening level. If the index makes a bearish close then traders will expect a bearish continuation to target the 2018 low.

U.S dollar index long-term direction might depend on the reaction near the support level. If a bearish breakout happens then further weakness toward the monthly SMA 20 is expected.

Weekly chart

It seems the index might have reversed its direction once again. Last week, the index closed below the bullish candlestick low and below the blue box area. If the index extends its bearish movement then traders will expect further weakness to target 88.25 and 88.80.

Daily chart

On the daily chart, the U.S dollar index might have broken below the support trendline. There was an attempt to bring the index higher but failed near the blue box area. It seems the index also rejected near the broken trendline. If we have a bearish close below the previous week’s low then traders will expect the index to target 90.00.

Trade plan (For U.S dollar pair)

The overall trend of the U.S dollar index is bearish especially after the trendline breakout in the daily chart. Traders will expect the index to continue its bearish movement at the current time and target the 2018 low. If the index reaches the support level and could maintain the positions above it then we might see a long-term bounce and the start of the new bullish trend.