U.S dollar index long-term technical analysis

Economies around the world are reopening despite the warning that the coronavirus outbreak could continue. New normal is coming and all financial instruments will continue to normalize for now. The U.S dollar index currently under bearish pressure as economies around the world reopening.

The latest Non-farm employment shows a surprise increase of 2509k vs. a decrease of 7750k. The unemployment rate sits at 13.3% vs 19.4% projection. It is a good number but might be too early to say that it will continue to show positive progress.

At the current time, we will expect the index to continue under pressure while waiting for further data releases.

New Month

Monthly chart

U.S dollar index breakout below the bullish channel, similar to the event which happened in March. In March, the index closed inside the channel after the breakout on either side of the channel. Will the index reverse its bearish direction and closed inside the channel again by the end of the month?

Weekly chart

The index needs to continue push lower below the weekly SMA 200. Otherwise, we might see a bounce from the WSMA 200, the same as in March. Traders will monitor the index reaction near the weekly SMA 200. A bullish reaction from the averages could lead the index higher to close inside the bullish channel again.

Daily chart

The trend on the daily chart extremely bearish with eight bearish closes. However, the bearish streak has been broken last Friday. We have a bullish pin bar pattern which need further confirmation for a bounce. This week, the index might stick near 96.70 while waiting for further reaction.

Further weakness below the level will lead the index to target 96.10.

Trade plan (For U.S dollar pair)

The overall trend is bearish for now but might change anytime, similar to the situation in March. Traders and investors are monitoring data after the economic reopening. Currently most data show positive development. If the data releases show positive numbers then traders could expect U.S dollar index continue on the bearish track.