USD Index Approaches Bearish Territory

Posted Monday, December 31, 2018 by
Shain Vernier • 1 min read

Thus far, it has been a quiet session for the USD Index. Moderate participation has been the order of the day, producing a tight range and negative sentiment. Following two straight losing sessions, March USD Index futures appear poised to test the 95.500 and 95.000 handles in early 2019.

Due to the New Year’s holiday rapidly approaching, the economic calendar is relatively sparse. A few minutes ago, the Dallas FED Manufacturing Business Index (Dec.) was released to the public. The number came in at a dreadful -5.1, well below November’s 17.6 figure. This has been the trend from FED metrics as of late, suggesting weakening U.S. regional economic conditions.

USD Index: Daily Technical Outlook

March USD Index futures have struggled to gain a positive foothold since posting early-December yearly highs. No doubt, public announcement of the new “flexible” FED policy for 2019 has many traders betting that the Greenback is in a position to weaken in the new year.

March USD Index Futures (DX), Daily Chart
March USD Index Futures (DX), Daily Chart

Overview: The FED has backed off greatly from September’s talk of adopting a more “restrictive” policy. Recent stock market chaos and weakening economic indicators suggest that a dovish FED is to be the theme for 2019.

While the 2018 uptrend in the USD remains technically valid, this market appears to be on the verge of correction. For March USD Index futures, rates are hanging just above the 38% retracement of the contract’s range, 95.555. Be on the lookout for a hard test and break beneath this level in coming sessions.

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