U.S dollar index long-term technical analysis

Coronavirus drives the market to the edge, there is no good news regarding the virus infection and death tolls. It seems the spread could become pandemic and further weaken the global market. In the current situation, the U.S dollar predicted will become one of the safe-haven currency to hold. However, the Fed action in the latest FOMC meeting caused the opposite to happen.

The market perceive the Fed emergency rate-cut by 50 bps is a panicked action. U.S dollar battered and start a major bearish correction. Until today, the index has lost 5% of its value. Combined with the oil price war it could further lead the index lower.

In the long-term, there is a chance for the index to continue its bullish trend but it might depend on the coronavirus situation at the end of this month.

New Month

Monthly chart

This month could be the right time to panic for the U.S dollar bull. The index finally makes a breakout below the channel and currently testing 95.00. It is possible the index could continue lower and target the orange area. If no bounce happens near the orange area then the index set for a long-term bearish trend.

Weekly chart

The index managed to complete the test of 99.40 resistance and on the path lower after it printed a double top pattern. We have a bullish channel breakout and a move below weekly SMA 200. All sign pointed to the downside which suggests traders avoid long positions for now.

92.00 – 93.00 might be the final target of the current bearish movement. However, if there is no bullish reaction or the index makes strong bearish close below the area then traders will continue holding short positions in the U.S dollar.

Daily chart

On the daily chart, it only took 12 days to bring the index down from 99.40 to 95.00. The index bearish momentum has not subsided which could lead the index further lower. No bullish positions suggested for now. Traders could consider short positions in U.S dollar when the index near 96.10

Trade plan (For U.S dollar pair)

U.S dollar index trend slowly turned bearish for medium-long-term. The index fall with strong bearish momentum which suggests traders avoid long positions for now. The index may stop moving lower near the orange area on the weekly chart.

At the current time, traders should wait and see.