The U.S. Dollar settled lower against a basket of major currencies on Friday after advancing over 100 for the first time in nearly two years. During the session, it rose as high as 100.20, its highest level since May 2020.
Despite forming a potentially bearish closing price reversal top, it still managed to finish up 1.3% for the week. The dollar index was primarily supported throughout the week by a jump in U.S. Treasury yields and a weaker Euro.
On Friday, the June U.S. Dollar Index settled at 99.753, down 0.007 or -0.01%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) finished at $26.68, up $0.01 or +0.02%.
The U.S. Treasury 10-year yield hit a three-year high above 2.7% on Friday, helped by the prospect of more aggressive Federal Reserve tightening. Additionally, this week’s release of minutes from the Fed’s March meeting showed “many” officials were prepared to raise rates in 50-basis-point increments in coming months.
In other news, the Euro was pressured by a tightening election race in France, the Euro Zone’s second-biggest economy, between President Emmanuel Macron and far-right candidate Marine Le Pen. Macron is still ahead in polls.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, Friday’s closing price reversal top indicates momentum may be getting ready to shift to the downside.
A trade through 99.745 will confirm the closing price reversal top. This could trigger the start of a 2-3 day correction. A move through 100.200 will negate the chart pattern and signal a resumption of the uptrend. The main trend will change to down on a move through 97.730.
The minor range is 97.730 to 100.200. Its 50% level or pivot at 98.965 is the nearest support level.
The major support is the long-term Fibonacci level at 98.200.
Daily Swing Chart Technical Forecast
The direction of the June U.S. Dollar Index early Monday is likely to be determined by trader reaction to 99.975.
Bearish Scenario
A sustained move under 99.975 will indicate the presence of sellers. Taking out 99.745 will confirm the closing price reversal top. If this creates enough downside momentum then look for the selling to possibly extend into the minor pivot at 98.965.
Bullish Scenario
A sustained move over 99.975 will signal the presence of buyers. The first upside target is 100.200.
Taking out 100.200 will negate the closing price reversal top and signal a resumption of the uptrend. If the buying is strong enough we could see an acceleration to the upside with the next major target 100.560 – 100.930.