U.S dollar index long-term technical analysis

Tapering is expected to start in March and the first interest rate might happen too. The U.S dollar index is in a bullish trend as long as the tapering and interest-rate hike continue this year. Traders will continue to monitor the inflation data released which shows rising trends. If the inflation number continues to increase then there is no room for weakness in the U.S dollar index.

New Month

Monthly chart

The situation on the monthly chart of the U.S dollar index shows that the index continues moving upward slowly. If there is no change to the situation then traders could expect the index to reach the top trendline or 100.00 handles. Meanwhile, if bearish movement happens then traders could observe the reaction near the orange box area.

Weekly chart

The W pattern on the weekly chart has been confirmed and the index managed to continue moving upward, breaking out above the weekly SMA 200. A bullish bounce has happened when retest happens but the index currently sticks near the averages. We might see more consolidation near the current level. If the index managed to maintain the position above the averages then traders will expect a bullish continuation.

Daily chart

On the daily chart, the U.S dollar index trend is sideway near the 96.10 level. There is no confirmation yet on the index’s next direction. Traders will follow the trend in the longer-term chart. Avoid short positions and enter long positions when the index produces bullish reactions from the support level.

Trade plan (For U.S dollar pair)

This year is a bullish year for the U.S dollar index. There is no reason for traders to enter short positions in the U.S dollar unless doing counter-trend trades. Whenever the index makes a bearish movement, traders will prepare near support levels to enter long positions in U.S dollar pairs. At the current time, the short-term time frame show ranging movement but next month we might see the different reactions as a rate-hike expected to happen.