The US Dollar Index staged a major comeback last week as traders moved back into the safety of the greenback, while the ECB and the Bank of England undertook drastic policy action.
US Dollar Index technical analysis shows that bullish MACD price divergence is pointing to a possible test of the 99.66 level.
US Dollar Index medium-term price trend
The US Dollar Index staged its strongest weekly advance in more than a decade, after finding support from just above the 94.60 level.
Traders and investors cheered efforts by the United States government to address the economic fallout from the Covid-19 pandemic, further boosting the greenback.
US Dollar Index technical analysis over the medium term shows that a huge bullish reversal pattern will form this week if the price reaches the current 2020 high, around the 99.90 level.
The daily time frame shows that according to the size of the pattern, a breakout above the 99.90 level could see the US Dollar Index rallying towards the 105.00 level over the medium term.
This morning the Federal Reserve cut interest rates dramatically and launched a new QE package. So far the greenback has held firm, which bodes well for continued US dollar strength.
US Dollar Index short-term price trend
DXY analysis shows that the index has a bullish short-term trading bias while the price trades above the 98.15 level.
The four-hour time frame shows that bullish MACD price divergence still exists, and extends towards the 99.66 level.
Given the strength of the recent recovery it is entirely possible that the MACD divergence can be reversed this week.
Should we see bulls failing to break above the 99.66 level the greenback could start to falter. Key short-term bearish targets are located at 96.90 and 96.50 levels.
US Dollar Index technical summary
DXY analysis shows that the index may test towards the 99.66 level as bullish MACD divergence is reversed. A huge bullish pattern will form if the price reaches the current 2020 high.