U.S dollar index long-term technical analysis
The trend of the U.S. dollar index has been bullish after the COVID event. The bullish movement topped in 2022 and since then the index has turned lower and range. The recent event tells that the weakness in the index will continue as the Fed will start cutting interest rates. It means traders better stay out of long positions in the U.S. dollar unless the inflation rate moves higher again or the Fed decides to delay the interest-rate cut.
New Month
Monthly chart
U.S dollar index moved lower since November 2022 and is currently supported by the 100.00 handle. It seems the index is trading sideways and waiting for further reactions. Technically, the high gets lower while the low stays at 100.00. If the index could bounce upward with strong momentum then it will need to break out above the trendline. A close above the trendline is a bullish confirmation. Meanwhile, a breakout and close below 100.00 will become a bearish continuation confirmation.
Weekly chart
On the weekly chart, the index is supported by the weekly SMA 200 and currently trading inside the green box area. We might see an upward attempt to test the trendline and the top of the green box area. At the current time, it is better to wait until the index breaks out from the range to confirm the next direction.
Daily chart
The index situation on the daily chart is bearish as it continues lower below the daily SMA 200. At the current time, the index manages to bounce and move upward. We might see a test on the 102.00 level or a continuation upward to test the top of the green box area / daily SMA 200. Traders will wait for reactions near the resistance levels, when there are bearish reactions then traders will get confirmation to enter short positions in the U.S. dollar.
Trade plan (For U.S dollar pair)
As the long-term trend will turn bearish after the Fed cuts interest rates, traders will use bullish correction in the index as a chance to enter short positions. At the current time, 100.00 is the major support level to watch. When a bearish breakout happens it will confirm the continuation of the bearish trend in the index. It is only a waiting game right now and traders who want to enter long positions in the U.S. dollar better stick with a tight stop order.