The U.S. Dollar is taking a beating against a basket of major currencies on Thursday after the Federal Reserve rolled out a $2.3 trillion effort to bolster local governments and small and mid-sized business. The aggressive move by Fed policymakers is designed to keep the U.S. economy intact as the nation combats the coronavirus pandemic.
At 18:11 GMT, June U.S. Dollar Index futures are trading at 99.365, down -0.805 or -0.80%.
The central bank’s announcement came shortly after the U.S. Labor Department said the number of Americans seeking unemployment benefits the week-ending April 4 topped 6 million for the second straight week, with businesses closed across the country in an attempt to stem the spread of the virus.
The Federal Reserve will continue to use all the tools at its disposal until the U.S. economy begins to rebound fully from the harm caused by the novel coronavirus outbreak, Fed Chair Jerome Powell said on Thursday, even as he acknowledged the limits of the central bank’s powers.
Daily Technical Analysis
The main trend is up according to the main trend indicator. However, the formation of a secondary lower top suggests momentum may be shifting to the downside.
A trade through 101.030 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at 98.345.
On the upside, the key resistance is a long-term 50% level at 101.495.
The main range is 94.530 to 103.960. Its retracement zone at 99.245 to 98.130 is the next downside target. This zone provided support at 98.345 on March 27. This retracement zone is controlling the near-term direction of the market.
The next major move by the U.S. Dollar Index will be determined by trader reaction to 99.245 to 98.130. The market is currently in a position to test the upper or 50% level at 99.245. Buyers could come in on a test of this level in an effort to defend the uptrend, but if it fails to hold as support then look for a possible acceleration to the downside with the lower or Fibonacci level at 98.130 the next likely downside target.
Downside momentum is expected to increase once the trend changes to down on a move through 98.345 and after if sellers can take out the Fib level at 98.130.
This article was originally posted on FX Empire
More From FXEMPIRE:
- AUD/USD Price Forecast – The Australian Dollar Breaks To Extreme Highs
- Natural Gas Price Forecast – Natural Gas Markets Drift Lower
- US Stock Market Overview – The Fed Comes to the Rescue!
- U.S. Dollar Index (DX) Futures Technical Analysis – 99.245 – 98.130 Controls Near-Term Direction
- GBP/JPY Price Forecast – British Pound Breaks Out Against Japanese Yen
- Gold Price Futures (GC) Technical Analysis – Overcoming $1768.00 Puts Gold in Extremely Bullish Position