From the yearly low of 88.2530 (on February 16, 2018), the Dollar Index has been more or less in an uptrend as is visible from the chart below. Now with the maturing of US-China trade talks in a positive direction and a possible extension of the March 1 deadline to hold the planned hike in tariffs on Chinese goods, the US dollar is likely to take a dip. It is seen heading towards 96.0240 initially after which the next support is seen at 95.0110. A rising wedge bearish pattern is in the formation.
A rising wedge is a pattern which begins wide from below and contracts as it moves higher while a narrow trading range can be seen along with it. It is a trend continuation pattern. The upper resistance line (red line) and lower support line (black line) start converging or contracting as time passes. The dollar index has to convincingly break past the lower support line to confirm the bearish outlook. Ideally with an increase in price, the volume starts declining and the rising wedge is formed.
With US markets having a lull week with respect to economic data and holiday yesterday in memory of President Washington, the focus is now on US President Donald Trump being sued by 16 US States which will probably add to dollar negative bias. Coming week will see GDP, Core PCE Price index and ISM Manufacturing PMI data being released to give further cue to greenback’s move.