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US Dollar Price Forecast: Key Levels and Signal to Consider

US Dollar Price Forecast: Key Levels and Signal to Consider

The US elections uncertainty combined with the recent lockdown caused by the second wave of the coronavirus led the US dollar index to edge higher. Will the rally continue?

US Dollar Index Technical Analysis

  • The US Dollar index price rallied to a multi-week high
  • Neutral outlook while below 94.04

Bullish Development

On Friday, the US Dollar index hit an over four-week high at 94.12 then retreated after. However, a weekly candlestick closed in the green with a 1.4% gain. Meanwhile, the Relative Strength Index (RSI) crossed above 50 signaling a possible start of bullish momentum.

Dollar Index Daily Price Chart (August 6 – November 3, 2020)

Chart source, Webtrader, Capex.com

On October 15, the Dollar index corrected its upward trend and started a sideways move creating lower highs with higher lows. Last week, the price closed above the 50-day SMA and yesterday the index moved to a higher trading zone 94.04 -95.25.

A daily close below the low end of the zone located at 94.04 reflects bull’s hesitation and could send the price towards the monthly support level at 91.72 ( Sep 1 Low).

On the other hand, another close above the low end of the zone indicates the bull’s intention to push the price further. As such, the Dollar index could rally towards the monthly resistance residing at 95.18 (Oct 2018 low).

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Dollar Index Four Hour Price Chart (September 21 –November 3, 2020)

Chart source, Webtrader, Capex.com

Last week, the US Dollar index traded above the slopping downward trendline originated from the September 25 high at 94.78 indicating a shift in favor of bulls control which has thus far held.

To conclude, the outlook of the US dollar index remains neutral even with the aforementioned bullish signals. That said, a break above 94.32 may trigger a rally towards 94.90 while a break below 93.35 could send the price even lower towards 92.40. As such, the support and resistance levels underlined on the chart should be watched closely.

This information/research prepared by Mahmoud Alkudsi does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk. The research provided does not constitute the views of JME Financial Services (Pty)Ltd nor is it an invitation to invest with JME Financial Services (Pty)Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of the date the report is published, the research analyst and his/her spouse and/or relatives who are financially dependent on the research analyst, do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities). The research analyst in not employed by JME Financial Services (Pty)Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation or particular financial needs before making a commitment to invest. The laws of the Republic of South Africa shall govern any claim relating to or arising from the contents of the information/ research provided.