U.S dollar index long-term technical analysis

Not a good end for the U.S dollar index last December. The index pressed lower and close below 97.50 and 96.70. Both support levels removed and the index in-risk of further weakness this year. However, tension brewing between the U.S and Iran. President Trump ordered an attack that killed Iranian General Qassem Soleimani. Yesterday, Iran decided to abandon the nuclear limit agreement and announce retaliation.

It seems this year outlook might turn extremely risk-averse as traders and investors fear world war 3 will happen. U.S dollar index might hold up against bearish pressure as the currency is one of safe-haven currency.

New Month

Monthly chart

A major breakout has happened on the monthly chart. U.S dollar index closed below the bottom of the channel and might change the trend from bullish to bearish. We have a bullish reaction at the start of this month. However, we think the index might turn lower before the end of the month and start a new bearish leg.

Weekly chart

A close below the bottom of the channel happened last week. However, it is not a convincing bearish close which means the bull still has a chance to reverse the current bearish outlook. 96.70 is the major support level to watch, as long as there is no close below the support level then the U.S dollar index might start a bullish bounce.

Daily chart

The index closed below 96.70 but immediately recover above it the next day. It means the bearish close is not conclusive yet. At the current time, traders will observe the index reaction at 96.70 support level.

Trade plan (For U.S dollar pair)

Stay sideline, for now, the trend could change radically depending on the situation in the Middle East. Aside from the tension, the market also will focus on the trade war situation. Escalating tension around the global world is favorable for the U.S dollar but not for the long-term.