US Dollar Index Long Term Technical Analysis | May 2022

U.S dollar index long-term technical analysis

Tapering has started this year but analysts think that the Fed has been left far behind the inflation curve. Inflation continues to increase to a level not seen more than 30 years ago. There is no confirmation that the Fed will increase interest-rate aggressively but if it happens then we will see major volatility in the market.

Meanwhile, traders will continue to hold to the long positions in the U.S dollar and avoid shorting.

New Month

Monthly chart

U.S dollar index broke above the bearish trendline last month and it continues to maintain the bullish pressure this month. The index is expected to continue its bullish movement and target higher resistance levels such as 109.77 and 114.42. There is no reason to turn bearish as the previous month’s candlestick close is a very strong bullish close.

Weekly chart

On the weekly chart, the U.S dollar situation is the same as in the monthly chart. The index currently testing the 103.82 resistance level and seeks to break out above it. If the index makes a bearish correction then traders will monitor the reaction near the 100.00 handles. At the current time, it is better to avoid shorting the U.S dollar until a major bearish pattern is formed.

Daily chart

Last week, there is a bearish reaction after the Fed interest-rate decision. However, the bearish reaction was short-lived as the bull returned to the market and erased all of the losses. We might see a bullish attempt to breakout above 103.82 this week. Similar to the higher time-frame situation, the index is expected to continue the bullish movement toward the next resistance levels.

Trade plan (For U.S dollar pair)

The long-term trend of the index will continue to be bullish this year as inflation continues to increase while the Fed might start increasing interest-rate aggressively. There is no reason to become bearish on the index. However, at some point, a bearish correction might happen. When a bearish correction happens, traders will wait near the support level for a chance to enter long positions in the U.S dollar.

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