Dollar Index (USDX) Technical Update

• The USDX made an attempt to break below the prior swing low mid-week and subsequently found support at this highly confluent 78.20 area; this has Fibonacci 38.2 retrace and FE 61.8 expansions aligned with the price structure support.
• The bullish engulfing candle that followed, on a failure to sustain a break lower, has seen good follow through after initially hesitating and forming a doji on Thursday.
• The USDX heavily weighted  EUR FX (CME) experienced a significant decrease in bearish sentiment over the reporting period from 21st Feb – 28th Feb with 142,159 to 109,674 net short contracts respectively.  This does not capture the bullish reversal seen on Wednesday but taken in isolation is bearish for the dollar.
• The upside move has us looking to potential resistance and price is now close to the 38.2% retrace of the major swing lower around 79.50 which ran from mid January through to early this week.  This area also has price pivot zone interaction.
• A failure to hold below the above technical resistance level would see 80.00 psychological round number and the 50% retrace of the aforementioned wave come into play.
• Average USDX 26 week range is 162 pips with this week covering 83% of the AWR and 135 pips.

Dollar Index Daily Chart