The U.S. Dollar Index Could Continue Its Rally


The market has embraced the in the last weeks. However, we still see this upward corrective pattern weakness through the ‘s price action, after the pair failed to test new lows.

The Commitment of Traders (COT) report for USD/CAD and showed an increasing interest in long positions by institutions.

Pairs and have moved up, bringing the DXY’s rally to a pause.

Technical Outlook

In the charts provided, arrows refer to entries. Dots indicate direction and bar colors, breadth.

Our weekly chart trend analysis of the displays a lack of breadth by the divergence in volume and price and volume distancing from open interest.

The 200 EMA represents resistance and may hold the upside for a few days.

It seems to be reverting higher, and if it closes above the 200 EMA with dark blue, green dotted bars, and blue arrows, we have a possible confirmation of more upside.

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Intraday Outlook

On the daily chart, the momentum dots indicate the movement is upwards.

The signal fired on Sept. 22, paused for seven days, and returned at the Asian session’s opening, predicting that the US dollar could surpass the weekly resistance soon.

The RSI is not above 80 yet, allowing space for the DXY to rally to higher levels. Open interest has surged, indicating that the market is pricing in a potential tapering of monetary policy.

US dollar daily price chart.
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The Fed has assured that they have tools at their disposal to battle inflation. 

Investors interested in going long the DXY should wait for a pullback before jumping on the bandwagon.

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Disclaimer: The analysis on this article is on the sole basis of educational purposes and does not pose financial advice.

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